Crown Resorts Ltd [ASX:CWN] has slipped down 3.64% to $12.50 a share, after James Packer decided to sell almost half his $4 billion stake to a Hong Kong-based entertainment company.
Crown shares boost Packers CPH
On Friday, it was confirmed that Packer’s private company, Consolidated Press Holdings (CPH), had sold 19.99% of its holding in the resort to Melco Resorts and Entertainment, a major gambling complex. The sale is said to be worth $1.76 billion, or $13 per share.
The move — which now gives CPH a 26% stake — will better diversify the company’s portfolio while allowing Packer to continue his ‘long-term involvement’ in what still represents his ‘single largest investment’.
CHP will lodge a notice of change in substantial holding and release further details of the sale agreement between CHP and Melco.
This is a much more positive story to come out of Crown in recent months, after news of worsening profits and the arrest of employees engaged in illegal gambling activity came to light.
The complex also faced embarrassment in April when a buyout proposal with Wynn Resorts was leaked before it could go ahead.
Crown’s share price 2019 outlook
This deal might be a positive step for Crown, given Melco experience in the lucrative gambling market, but it’s unclear just how much control Packer CPH will have once the deal goes ahead.
Melco has signalled that they will seek representation on Crown’s board, while Melco owner Laurence Ho has hinted he would be willing to increase their stake further.
At any rate, Packer’s move to step away from Crown removes some confusion for investors after months of disappointments and foiled plans.
The question now is whether investors are keen on an agreement with what many see as a controversial rival.
For Money Morning
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