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New Zealand casinos for sale

Oct 2, 2007 5:40 AM

Back in the mid 1980’s, Harrah’s Entertainment Inc. (HET) owned a piece of SkyCity Entertainment, New Zealand’s largest gaming company, and also managed one of the company’s casinos.

So, last week when a "mystery consortium" reportedly showed interest in acquiring the New Zealand gaming company, speculators were quick to suggest that TPG Newbridge might be leading the inquiry into purchasing SkyCity.

TPG is Texas Pacific Group which is partnering with Apollo Group in a bid to take over Harrah’s Entertainment. Despite concerns about the credit crunch in the U.S., the Harrah’s acquisition for $92 per share is expected to close prior to year end.

"SkyCity has agreed to allow the interested party to undertake commercial and financial due diligence on SkyCity which may potentially result in a firm proposal to acquire Sky City," said a statement filed by the casino operator.

"The board plans to actively approach other parties to assess their potential interest in SkyCity," the statement concluded.

Business hasn’t been that great of late for SkyCity and this prompted the operators to put its Adelaide casino and its movie theater operations up for sale so as "to avoid any market uncertainty."

This caused a Wellington, N.Z., newspaper to suggest that the "mystery consortium" might by TPG Newbridge.

A senior analyst for Citi Investment Research suggested, "The board’s move to actively invite and seek additional bids suggests the likelihood of M&A now eventuating is high. In the absence of a bid the business remains challenged. It lacks a CEO and will continue to do so with ownership uncertainty. It also lacks full board membership and has seen significant change to senior management in recent months."

Another potential suitor being suggested is Evan Davies, SkyCity’s former managing director. He left the company last June after taking a lot of grief from the company directors who were unhappy with the company’s performance.