SkyCity captures MGM Grand Darwin

12.02.2004, Lesen Sie hier den Bericht über «SkyCity captures MGM Grand Darwin».

KIWI gaming group SkyCity Entertainment unveiled a second big Australian play yesterday by agreeing to pay US operator MGM Mirage $195 million for its Darwin casino and hotel. The deal, subject to regulatory approvals, marks a further consolidation of Australia' gambling sector following Tabcorp's acquisition of Jupiters' last year and tussle with UNiTAB for control of NSW TAB and industry domination.

SkyCity already owns one casino in Adelaide and three in New Zealand, as well as a number of cinemas through its majority shareholding in Sky City Leisure. Managing director Evan Davies said yesterday the 107-room beachfront casino represented an excellent opportunity for SkyCity to "increase its footprint" and consolidate its position in the Australian gaming sector. "The capability we have shown in translating our New Zealand-based experience into an Australian context, through our South Australian investment, assures us that a second operation within Australia will be positive for the company," he said. "We have been saying for some time that SkyCity is well-positioned for expansion and Australia presents a logical opportunity, particularly from a geographical perspective. Our interest in Darwin is consistent with the company's strategic direction."

But analysts really consider the deal a second prize. SkyCity had been particularly interested in the Burswood casino but faced being blocked by Kerry Packer's Publishing & Broadcasting, which bought a strategic stake in the Perth business last year.

At one stage SkyCity was also being tipped as a possible rival bidder for Jupiters and as potential suitor for the sports betting arm Centrebet. Mr Davies said the property, to be renamed SkyCity Darwin, would be debt-funded and required no significant capital outlays beyond branding changes. "The recent expenditure of $18 million on property improvements and the fact that 90 per cent of the property's gaming machines are less than three and a half years old means that major capital outlays need not be immediately on the agenda," he said. "This is a prominent facility in a region with a favourable economic outlook. The casino complex is already a major entertainment venue and has the capacity for further development, which is exciting for a business like ours."

MGM Darwin, which boasts 26 tables, 450 poker machines and 50 Keno venues, has been attracting about 3000 visitors a day. The business generated revenue of $74 million to June 30 last year and an operating profit of $27 million. Gaming accounted for approximately 78 per cent of the property's total revenue, followed by food and beverage (16 per cent), with hotel sales making up the balance. SkyCity shares, which were untraded in Australia, closed steady at NZ$4.60 off a high of NZ$4.65.

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