Asia could be a winning bet for Sky City

Evan Davies is looking for expansion overseas even as his company consolidates at home. Picture / Paul Estcourt

Sky City Entertainment is eyeing overseas expansion as consolidation of the local gaming industry in Australasia leaves little room for acquisitions.

The company owns outright or has a substantial stake in most New Zealand casinos and, with a ban on new casino licences, growth is limited.

Managing director Evan Davies said yesterday tight consolidation in Australia meant the company would need to look outside the region it had operated in for a decade for growth.

"The businesses [in Australia] that are attractive are, in the main, owned by one of the major groups," said Davies.

"But there are opportunities further afield."

The company, which last week reported a 13 per cent rise in profit to $120.1 million for the year to June 30, was outbid last October for 33-pub Taverner Hotel Group by Woolworths, which paid A$380 million.

Davies said Sky City, one of four main players in Australasia, was "still looking around" for acquisitions that could create value but it was focused on consolidating and capitalising on its business.

He did not indicate which countries outside Australasia were of interest, but First NZ Capital research head Rob Bode said the company would probably look to Asia.

But Bode said it would need to be an "extremely good" opportunity where the company could add a lot of value.

Sky City was focused on investing in its casinos in Adelaide, Darwin and Auckland, where a $40 million redevelopment of the gaming floor was planned.

He also said Sky City showed interest whenever gaming businesses came up for sale.

Some analysts expect Australian casino operators to look again at Sky City as a potential takeover target after a negative competition ruling across the Tasman this month.

Gaming giant Tabcorp Holdings, which owns Sydney's Star City Hotel and Casino and the Jupiters Hotels and Casino properties in Brisbane, Gold Coast and Townsville, was looking at new opportunities "domestically and internationally" after it withdrew its proposed takeover of Queensland-based UNiTAB when the Australian Competition and Consumer Commission opposed the acquisition.

Davies said speculation that Sky City was a takeover target for Australian gaming companies was further proof of the appetite for acquisitions.

IN THE HAND

New Zealand

* Auckland casino, four- and five-star hotels, convention centre, restaurants, bars: 100 per cent ownership.

* Hamilton casino: 100 per cent ownership.

* Queenstown boutique casino: 60 per cent ownership.

* Christchurch casino, including stakes in Crowne Plaza Hotel and Dunedin casino: 40.5 per cent ownership.

Australia

* Adelaide Casino: 100 per cent owned, bought in 2000.

* Darwin casino: 100 per cent owned, bought in 2004.


* Shares in Sky City fell 6c to $5.12 yesterday.