Australian company is undervalued
James Packer could add more than $1 billion to his personal worth as he spins off his company, Crown Resorts, into an Australian business, an international business and a property trust, according to analysts at the Macquarie Group.
The analysts’ report, cited by the Australian Financial Review, said that splitting the undervalued Australian casino business from Crown’s international interests, particularly its stake in Melco Crown, could help boost Crown’s valuation to $14.95 a share. Spinning off most of his Australian hotels into a property trust could add another $1.43 per share, according to Macquarie.
The equation adds up for Packer; based on his stake, which amounts to 364.3 million shares, the development could add $1.1 billion to his $4.8 billion worth. It could also boost Crown’s overall market value from $9.7 billion to approximately $11.9 billion.
Macquarie is bullish on Crown, “with or without the proposed de-merger, as the current share price still fundamentally undervalues the Australian assets.” It could take up to 12 months to clear regulatory hurdles and complete the spin-offs.
As the plan unfolds, Crown says it will “defend vigorously” a legal challenge to planning permission for its Crown Sydney resort. In late July, the state of New South Wales granted conditional consent for the AUD2 billion (US$1.5 billion) venture. But the decision has been challenged by Millers Point Fund Inc., described by the Daily Telegraph newspaper in Sydney as “a protest group.”
