Publishing and Broadcasting (PBL), the Australian media and gaming conglomerate built up by the late Kerry Packer, is to be split in two in a further radical refashioning of the group by the billionaire’s entrepreneurial son.
The Sydney-based group said on Tuesday it would divide itself into separate media and gaming entities and also make a A$2bn capital return.
The news caused the shares, which had underperformed the market this year, to jump A$1.26, 6.1 per cent, to A$21.99, up from about A$16 at the beginning of last year when James Packer, executive chairman, assumed full management control after the sudden death of his father. Shareholders will vote in August on the proposal, which would give them one share in each of the two new entities as well as A$3 for every share held in PBL.
As PBL’s largest shareholder with 37 per cent, Mr Packer, already Australia’s richest individual, stands to reap a A$755m windfall from the capital return. He will remain the dominant shareholder in the new companies but has eschewed an ongoing management role in the media business, staying on as executive chairman of the gaming group alone.
PBL said the move would lead to clearer valuations of the underlying assets, creating two “pure-play” companies. The group, which has invested heavily in a string of casino businesses in recent years, had been trading at a significant discount to other gaming companies including its joint venture partner.
“It is now time to let these two successful businesses prosper in their own right,” Mr Packer said.
A new group, Crown, is to hold the gaming businesses which include the Crown and Burswood casinos in Australia and a 41 per cent stake in Melco PBL Entertainment, a Nasdaq-listed joint venture with Lawrence Ho. The venture is on Wednesday due to open its first casino, in Macao.
“They will be hoping the value of the Macao assets will be more accurately reflected in the share price [of Crown],” said a Sydney-based analyst. Within PBL, these had traded at a 30 to 40 per cent discount to the Melco PBL venture, he added.
PBL’s Australia-focused media business is to be housed in Consolidated Media Holdings. The division’s assets include stakes in pay TV operations and an online job agency as well as a 50 per cent stake in PBL Media. The latter comprises the rump of the group’s magazine and TV business, half of which was sold by Mr Packer to CVC Asia Pacific, the private equity group, for A$4.54bn last October within days of media liberalisation laws passing the Australian parliament.
Private equity investors have been among the most active in the rush of deals that have swept the Australasian media sector since then. In a separate development on Tuesday, Sydney-based Ironbridge Capital said it would buy a 70 per cent stake in MediaWorks, in a deal valuing the New Zealand radio and TV group at NZ$727m.
The private equity outfit is buying the stake from CanWest Global Communications and has launched an offer at the same price for the remaining 30 per cent. At NZ$2.43 a share, the bid represents a 49 per cent premium to the price before CanWest appointed Citigroup to review the options for its Australasian assets last October. The bank is believed to be in the final stages of finding a buyer for the Canadian group’s controlling stake in Ten Network, Australia’s third free to air TV station.