Speculation is rife that Crown is to make a move for its Australian competitor Echo Entertainment Group.
Crown, which operates casino properties in Melbourne and Burswood, announced today that it has paid AUS$256.6m to double its stake in Echo to 10 per cent.
Echo’s corporate constitution contains restrictions on persons having voting power of more than 10 per cent of the company’s shares without first obtaining the written consent of the New South Wales Casino, Liquor and Gaming Control Authority and the Queensland Attorney General.
Crown further fuelled rumours it is to launch a takeover by confirming that it is seeking these consents to increase its voting power beyond 10 per cent.
Echo said that Crown had requested that it agree to a representative from the latter sitting on the board. However, having taken into consideration the interests of all shareholders, Echo said that it would be “inappropriate” given that Crown is a competitor organisation.
The Crown group, which also includes a stake in Macau’s Melco Crown Entertainment and the UK-based Aspers casino brand, reported a 27.6 per cent increase in normalised net profit after tax to AUS$211.6m for the half year to December 2011. Normalised EBITDA grew 3.8 per cent to AUS$362.4m in the period.
Its Australian casinos reported normalised revenue growth of 10.7 per cent to AUS$1.3bn, while EBITDA increased 5.2 per cent to AUS$386m.
“Overall, the results for Crown’s wholly-owned Australian casinos, Crown Melbourne and Burswood, were reasonable given the challenging operating environment and the state of the consumer economy,” said CEO Rowen Craigie. “The results from Melco Crown Entertainment, our Macau joint venture, continue to improve and were the major contributor to the growth in NPAT for the group.”
