Tycoon Packer to break up empire

Australia's richest man, James Packer, will split his Publishing & Broadcasting Ltd empire into two listed gaming and media companies and return A$2 billion ($1.7 billion) to shareholders, sending the firm's stock up 6 percent.

Packer, who took control of PBL following the death of his father, said he would separate the company's fast-expanding gaming and casinos operations from its traditional businesses of television and magazines to boost the stock price and pursue growth.

But some analysts said the real reason was to find a home for the cash from its A$4.5 billion sale of half of its media assets into a joint venture with private equity firm CVC Asia Pacific last year.

"I think the main message is that they are struggling to reinvest the cash and giving A$2 billion dollars back to shareholders, they have decided, is a better alternative than to holding on it," said Tony Pearce, a portfolio manager with Legg Mason Asset Management, which oversees about A$3 billion, including PBL shares.

PBL shares rose 6.4 percent to close at A$22.05. They rose as much as 8.5 percent on the news.

Shareholders will receive one share in each of the two companies, to be called Crown and CMH, plus A$3.00 cash for each PBL share held. They can elect to receive a greater proportion in cash or shares.

Big payout

The restructure will return A$2 billion in cash to shareholders, PBL said.

PBL will house its casino and international gaming assets in a company called Crown.

A company called Consolidated Media Holdings (CMH) will include its Australian TV network, magazines, stake in Australian pay-TV business Foxtel and other media businesses.

PBL has diversified away from its traditional media base in recent years to focus on more lucrative gaming assets. It has a casinos joint venture in Macao and last month bought a stake in a Las Vegas casino developer and nine Canadian casinos.

'Riskier assets'

"In this heated market the split has created two much riskier assets, a mega-geared media company with limited earnings, and casino development company with strong earnings and a huge appetite," Commonwealth Securities analyst Craig Shepherd said.

Analysts said it was unclear how PBL's remaining debts and cash would be divided. PBL declined to comment beyond the statement.

Both companies will be listed on the Australian stock exchange. Packer's private family company Consolidated Press Holdings Ltd would retain a 37 percent shareholder in both companies.

"It is now time to let these two successful businesses prosper in their own right," Packer, PBL's Executive Chairman, said in a statement.

PBL has a market capitalization of about A$15 billion at current share prices.

PBL is trading at around 23.6 times forecast earnings for 2007, according to Reuters data. This compares to 48.4 for top US gaming firm Las Vegas Sands Corp, 27.5 for MGM Mirage and 21.9 for Harrah's Entertainment.

Packer's father Kerry formed PBL in 1994 when he merged Consolidated Press and his network television holdings. Combining his love of gambling and business, Packer became a partner in Melbourne's Crown Casino in 1994.

Kerry Packer, whose fierce business reputation dominated corporate Australia, died in December 2005 aged 68.

Agencies

(China Daily 05/09/2007 page16)