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James Packer's Publishing and Broadcasting Ltd (PBL) is to split its ballooning Australian gaming interests and its media assets into two separate companies.
Six months after divesting its main media assets into a new company PBL Media, PBL said the move to split into two listed companies would allow better recognition of its underlying assets.
PBL shares soared as the Australian sharemarket embraced the second major restructure by Mr Packer, jumping by as much as 8.5 per cent.
The new gaming company, to be known as Crown, will house Melbourne's Crown Casino and the Burswood Casino in Perth, PBL's 41.4 per cent stake in its Melco PBL Entertainment Ltd, which is involved in gaming developments overseas, and other gaming assets.
The media company, Consolidated Media Holdings (CMH), will include PBL's 50 per cent interest in PBL Media, which houses the Nine television network, ACP Magazines, and holdings in Sky News and internet portals ninemsn, carsales.com.au and myhome.com.au.
The remaining 50 per cent of PBL Media was sold to private equity firm CVC Asia Pacific when the company was created in October to free up cash for Mr Packer to expand his international gaming interests and take advantage of new media ownership rules.
CMH will also hold PBL's 50 per cent interest in Fox Sports, 25 per cent stake in pay TV group Foxtel, 27.1 per cent of jobs site Seek and 100 per cent of Ticketek.
PBL said its financial advisers, investment bank UBS, expect Crown to hold a position in the S&P/ASX 50 and CMH a position in the S&P/ASX 100.
As part of the restructure, PBL said its shareholders will also receive about A$2 billion ($2.3 billion) in cash, as well as shares in Crown and CMH.
Mr Packer, Australia's richest man and PBL's executive chairman, said PBL had successfully recapitalised its investment in PBL Media over the last 12 months and seen strong earnings growth in its new media businesses, including the company's pay television interests.
As for its gaming interests, Mr Packer said that after consolidating Crown's leading position in the Australian market with the acquisition of Burswood in late 2004, the company had turned to leveraging its gaming expertise offshore.
This included significant investments in Macau, and more recently, in the United Kingdom and South America.
"It is now time to let these two successful businesses prosper in their own right," Mr Packer said.
"Investors will have the opportunity to invest in a strong and growing pure play media company and also in a world class gaming company."
PBL chief executive John Alexander said the two businesses had different operating characteristics and capital requirements, and separating them was the best way to create shareholder value through growth opportunities.
"The restructure will offer shareholders a clear choice of investment, providing each business with improved flexibility, a clear mandate, and an appropriate cost of capital," Mr Alexander said.
The two new businesses will be operated separately, each with its own board.
Mr Packer and Mr Alexander take complementary roles in the new companies, with Mr Packer as executive chair of Crown and deputy chair of CMH and Mr Alexander as executive chair of CMH and deputy chair of Crown.
Rowen Craigie will become the chief executive officer and managing director of Crown, which will be based in Melbourne.
The restructure is to be implemented through schemes of arrangement in PBL and Crown, to be put to shareholders for approval in August.
Shareholders will receive one share each in Crown and CMH, plus A$3.00 cash for each PBL share held, with investors ending up the same number of shares in Crown and CMH after the schemes are fully implemented.
Shareholders will be able to elect to receive a greater proportion of their entitlements in cash or in shares.
PBL shares rose as much as 8.5 per cent, or A$1.77, to A$22.50 in early trade.
- AAP
