Strategy shift will see Packer scale back international ambitions and become almost entirely focused on Australian business

This article is more than 3 years old

This article is more than 3 years old

The casino magnate James Packer has scaled back the international ambitions of his gambling empire in a dramatic strategy shift that will see him concentrate on his Australian business.

Crown Resorts, which is controlled by Packer, announced on Thursday that it has dumped plans to spin off his international assets and has halved his stake in the venture’s troublesome Chinese business.

Crown, which is still dealing with the arrests of senior employees in China in October, said it had agreed to sell almost half its 27% stake in Melco Crown Entertainment for $1.6bn to Packer’s Hong Kong-based partner, Lawrence Ho.

And in a signal of complete retreat from the once-booming Macao business, Crown said it was “exploring potential options” to offload the remainder of its stake in Melco Crown.

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It also revealed it would not proceed “at this time” with its huge $2bn Alon casino development project in Las Vegas and abandoned a plan – announced only in June – to separate its international assets from its Australian casinos.

“The board’s decision represents a prudent alternative to the proposed demerger,” Crown chief executive Rowen Craigie said in a statement.



The change of strategy and retreat from China means Crown will become almost entirely focused on Australia where Packer has punted billions on the success of his luxury casino and hotel development at Barangaroo in Sydney.

But with the controversial waterfront scheme built on attracting ultra-wealthy gamblers from China, questions remain as to whether it can avoid the same problems as the Macau business, which has been hit by Beijing’s crackdown on high rollers.

A first-half trading update released by Crown on Thursday showed a 45% drop in turnover from high-roller gambling at its Australian casinos over the 23-week period, compared with a year earlier. The company said that extremely strong VIP gambling activity in the same period last year had skewed the results.

However, half the profit from the sale of the Macau assets will be used to pay off $800m in debt and underpin the Barangaroo project. The other half will be returned to shareholders via share buybacks and a special dividend.

“This is all about risk management,” said Theo Maas, at Sydney-based Arnhem Investment Management. “You’re now looking at a much more predictable business with a much stronger balance sheet.”



Packer, who once pinned his hopes for expansion on Macau, will resign as deputy chair and non-executive director of Melco Crown Entertainment as Ho takes over the reins.



Under the Melco share sale, Crown will be left with a 14% stake in Melco Crown, with the Australian company saying it is now exploring options to “monetise” part of the shareholding but stating there was no offer of any sale of shares.



Crown also said it was continuing to prepare for a proposed share market float of a 49% stake in some of its Australian hotels and associated retail property.



“These business decisions are strategic and for the long-term and will underpin the company’s future over the next decade,” Crown Resorts chairman Robert Rankin said.



Crown shares went into a trading halt ahead of the announcement. They last traded at $11.37.

