James Packer may sell his interest in Melco Crown Ent.

Apr 30, 2012 7:55 PM

Australian billionaire James Packer, whose family owns Crown casinos, may sell his interest in Melco Crown Entertainment Ltd. (MPEL), the company that operates casinos in Macau.

Packer joined with Lawrence Ho, son of the legendary Macau gambling kingpin Stanley Ho, to form Melco Crown Entertainment and to become a major player in the Macau gaming market.

But recently, Packer has indicated an interest in buying out his greatest Australian competitor, Echo Entertainment, a company that has a market value of $3.2 billion and is considered a likely takeover candidate.

According to an article in the Wall Street Journal, Sam Theodore, a gaming analyst with UBS Research, sees the recent rise in MPEL’s shares as providing a windfall for Packer, should he decide to cash in on the company’s stock rally.

As of Monday, MPEL shares were trading on the NASDAQ at $15.52.

Reportedly, another gaming analyst has indicated he felt Genting Singapore could be a potential bidder for Echo, thus raising the company’s value. However, Packer, as the owner of a 10 percent stake in Echo would appear to be better positioned to acquire the company.

“The key question for Crown will be: does the strategic rationale for holding Melco outweigh the significant EPS (earnings per share) accretion in using it as a way of funding any Echo potential takeout?” said Theodore.