JAMES Packer's Crown has signalled
it is in no rush to make a full takeover bid for rival casino group Echo
Entertainment after amending its application to up its stake in the
takeover target to a specific limit.
In the latest twist in the battle for control of Echo, which owns
The Star in Sydney and three casinos in Queensland, Crown today said it
was seeking approval from regulators to acquire up to 25 per cent of
Echo.
While the amendment has been accepted by the regulators, no decision to grant Crown's application has been made.
A
statement by Crown today said: "If Crown is eventually granted approval
to increase its ownership in Echo to up to 25 per cent, then Crown
would not be able to acquire additional Echo shares such that Crown's
ownership would increase above 25 per cent without first making another
application."
That application "would then be subject to further investigation and ultimately a determination by regulators", Crown said.
Crown's application today came after Perpetual yesterday won approval
to acquire up to 15 per cent of Echo, in decisions by the NSW
Independent Liquor and Gaming Authority and the Queensland Office of
Liquor and Gaming.
Under Echo's constitution, no party can own
more than 10 per cent of the company without regulatory approval, and
potential predators Crown and Malaysia's Genting are awaiting the nod
from the state watchdogs to move beyond that limit.
Today's move
marked the first time Crown has specified a shareholding target, unlike
Perpetual, which is understood to have applied for up to 15 per cent.
In
early sharemarket trading today, Echo shares slid 2 cents to $4.28,
while Crown gained 3c to $8.50 in a broadly positive market.
Nomura
analyst Nick Berry yesterday told The Australian that the regulators
may only approve potential bidders to up their stake in Echo in
increments, so as to assess whether they are adequately capitalised to
take over Echo's casinos.
While Genting's and Crown's appetite for
a full bid for Echo are unclear, several analysts have questioned Crown
and Mr Packer's desire and financial ability to launch a $3.3
billion-plus takeover of Echo. A full bid would also be a departure from
Genting's corporate strategy.
Crown applied to the regulators to
move beyond 10 per cent in March, ahead of Genting last month, pointing
to a drawn out process for approval. Crown today said the regulators
have not made a decision to grant's Crown's amended request.
It
comes as Genting chief KT Lim and his corporate lieutenants seek
meetings in Australia this week with the NSW and Queensland regulators.
Observers said the Genting moves were not surprising, given the group
recently acquired 9.9 per cent of Echo.
Deutsche Bank analyst Mark
Wilson told clients today: "We view the receipt of the regulatory
approval by Perpetual Investment Management to increase its shareholding
in Echo from 10 per cent to 15 per cent to be instructive for Crown and
the Genting Group as to timing and process.
"Perpetual's
application took about eight months to be approved and we believe those
of Crown and Genting could take a similar amount of time. Based on this
timeline, this would imply an October 2012 approval for Crown and
February 2013 for Genting."
But Mr Berry pointed out that any
predator for Echo could still bid for Echo in the meantime, subject to
regulatory approval to up their holding beyond 10 per cent.
While
Perpetual has reduced its holding to below 5 per cent, to reap some of
the stock's recent gains, the fund manager is understood to have not
ruled out buying back in and could again emerge as a key player in any
corporate activity.
