Shares in Crown Resorts have sky rocketed today on news that James Packer, Australia’s third-richest man, is in talks to return some of his casino assets back to private ownership. CWN shares are currently up 14% on the day. had highlighted in its previous update that shares were significantly undervalued and looked to be an attractive opportunity. still believes the share price has further to run on current valuations and therefore maintains its buy rating.
Over the past month Mr Packer has been accumulating socks in the open market, increasing his share holdings by 3% to take his total holdings to 53.1%. believed that Mr Packer was sending a clear signal that he thought the current share price significantly undervalued the company.
Packer’s Consolidated Press Holdings Pty has been speaking with private equity firms and pension funds about a possible joint bid for some assets of his publicly traded Crown Resorts Ltd.
A deal hasn’t been finalized, and the talks may still fall through and therefore risks remain around the success of this deal. However, is in favour of the deal progressing and a premium is likely needed to be paid by Mr Packer in order to acquire the assets.
correctly highlighted in its last trading update that Crown’s assets were significantly undervalued and saw the stock as an excellent opportunity gain exposure to some of ’s top portfolio thematics. Crown’s VIP Australia turnover was up 44% at the last trading update and with tourism and retail set to take off in Australia, had Crown as one of its top Australian picks.
maintains its buy rating at current prices. We believe Crown’s assets are still undervalued at current prices. If Mr Packer is to acquire some of the business operations, he is likely to need to pay a moderate premium for them. This will provide on-going momentum for the shares.