Are Sky prices sky-high?
SkyCity Entertainment may be testing the waters for a sell-off of non-core assets, including the underperforming Darwin Casino, an Auckland hotel, and several parking venues, reports the Australian Financial Review. The company denied that the property was for sale.
An obvious suitor might be the Star Entertainment Group, which could create a “trans-Tasman gaming powerhouse” through the acquisition reported AFR. But Star—formerly Echo Entertainment—is committed elsewhere, and is concentrating on its $3 billion Queen’s Wharf Brisbane project.
In addition, SkyCity may be too rich for its tastes, with shares trading at 18-to-20-times current year profit, similar to the Star. Add an approximate 30 percent takeover premium, and Star shareholders would likely turn thumbs-down on the proposal.
SkyCity’s ratio of debt to EBITDA is expected to reach three times by the 2018 fiscal year, analysts say.
Meanwhile, CEO Nigel Morrison has stepped down. The company said it has been considering a succession plan since last September. COO John Mortensen will step in while the company conducts a global executive search for a successor.
