Two of the world’s largest casino business firms could enter the bidding for the ownership of The Star casino in Sydney. Genting Singapore and Wynn Macau are rumored to be joining Crown in the race for Echo Entertainment in order to strike out a strategic chord in the Asian market. The move is seen by many as Genting and Wynn trying to make up for the respective lack of business in Macau and Singapore by attempting to coax customers to Australia’s business centre.
UBS AG estimate the Australian VIP market will be worth US$100 billion in wagers by 2014. 16 million visitors will be arriving from China and most will look to partake in some form of gambling whilst in the country.
“Eighty percent of travelers out of China end up going to a gaming venue on their first trip,” said David Wiadrowski, an entertainment and media partner at PwC in Sydney. “With the renovations at The Star, they’re trying to do as much as they can to attract as many as they can.”
Genting will bid US$4.6 billion – 44 percent above the market value – for Echo with Wynn likely to bid a similar amount and the serious prices in place reflect the gains that can be made in this location.
“Genting’s in Singapore but it’s not in Macau. Wynn’s in Macau but it’s not in Singapore. It’s about adding another geographic option for their VIP customers,” Sam Theodore, an analyst at UBS, said.
No word yet from Wynn on whether they’d consider making a bid and James Packer’s Crown are still in the box seat with a 10 percent stake in Echo already in place. If Crown do get their hands on Echo then it will mean they have a monopoly in Sydney until 2019. Adam Alexander, an analyst with Goldman Sachs Group Inc, explained they’re set to make it very hard for anyone else in the Australian market.
“If Crown moves to 20 percent it makes it virtually impossible for those guys to come in and take it over,” he told Macau Daily Times by phone. “Trying to go head to head with Packer in his own market would not make sense.”
The only thing you doubt with Crown is how much they have to give up to fund a takeover bid. In recent weeks we’ve heard they’re looking to give up the Melco Crown stake. Genting might be better placed trying to get a piece of this to get a larger part of the VIP market in Asia.