Shares in Crown Resorts (CWN) surged by nearly 15% yesterday to close on $12.23 on media reports that James Packer is looking at taking the company private.
The reports surfaced in the early afternoon and the shares leapt sharply in yesterday’s 2.4% surge in the wider market ahead of the Fed interest rate decision this morning.
Rumours have have been circulating that mr Packer was talking to various partners about a takeover – his private company, Cons Press owns 43% of Crown.
After the early jump, the shares settled back to close at $11.77, up 10.5%.
It was the biggest daily rise for the casino group’s shares since early 2009.
CWN 1Y – Crown shares soar privatisation rumors
Up to yesterday, Crown shares had fallen by 20% in the past year (cutting the value of the company by $2 billion. Now that loss has been halved to a still substantial 10%, or around $1 billion.
Much of that weakness has been driven by the sharp fall in gambling revenues in Macau where Crown’s 33% owned associate, Melco Crown is battling the impact of the anti-corruption drive in China.
Gambling revenues have fallen more than 30% this year and Melco Crown has spent heavily on a new casino for Macau and a new facility in manila, without any impact on its financial performance.
Crown’s debt jumped 47% per cent to $2.5 billion in 2014-15, and the company is facing more calls for capital to fund an ambitious expansion plan in Las Vegas.
