One of the smartest investments ever made by Australian gaming magnate James Packer (above) was to join Lawrence Ho in forming Melco Crown Entertainment to develop casinos in Macau. The partnership has been enormously successful, owning and operating the Altira, City of Dreams and now Studio City. Packer owns 33 percent of Melco Crown.

But Merrill Lynch analyst Nathan Gee believes Packer would consider selling his stake to finance a takeover of the Echo Entertainment Group, the recent casino spinoff from Tabcorp. Echo owns Australian casinos in Brisbane, the Gold Coast and Townsville, along with its flagship property, Star City, the only casino in Sydney. Crown already holds a minority interest in Echo, but Gee says Packer wants more.

“We can’t discount a Crown takeover of Echo, but we think a deal is unlikely until 2012,” Gee told The Australian.

And because of the strength of the Melco Crown shares compared to Crown Casinos shares, Gee believes Packer would consider selling out in Macau.

“We can’t rule out Crown looking to divest Melco Crown, particularly if the Australian market continues to discount the value of Macau relative to the Melco Crown share price,” he said.

Crown has said it has no current plans to increase its holdings in Echo.

If Packer did consider selling his share, there is one company that would likely be first in line: Caesars Entertainment. Shut out of the initial license concessions, Caesars has been anxious to get into the Macau market, but unable because no new licenses will be issued until at least 2020, and no other concessionaire is likely to sell.

By GGB Staff

Staff writers for Global Gaming Business magazine. Las Vegas, Nevada.