The AFR’s Neil Chenoweth produced
an interesting obituary on Kerry Packer which included the following
line: “While Packer had successes after these three deals (privatising
PBL, Valassis and buying back Nine) everything else appeared small
change – until 1999, when he pulled off another huge coup, buying Crown
Casino for two times earnings.”

Now there’s no doubt that Crown
has been a good deal for PBL shareholders – but Lloyd Williams wasn’t
that stupid. Crown shareholders were issued with online casino games australia 15.1% of the company
or 90 million new PBL shares which have soared in value from about $550
million on the day the takeover was announced to $1.53 billion this
morning when the stock cracked $17.

In other words, Crown
shareholders have almost tripled their money by swapping into PBL
shares, so unlike Bondy and Channel Nine, they’ve enjoyed the upside.
PBL also took on about $1.2 billion in Crown debt, which explains the
takeover valuation of $1.82 billion in the explanatory memorandum that
was sent to PBL and Crown shareholders.

Sure, Lloyd Williams
splashed about $2.2 billion building what was then the world’s biggest
casino. But Crown shareholders who hung onto their PBL shares have
recovered everything.

While PBL is today capitalised at $11.4
billion, it only claims to have net assets of $4.5 billion, something
auditor SJ Ferguson from Ernst & Young claims is true and fair.
With net debt of $1.74 billion, the Crown business is clearly valued by
the market at more than $3 billion for PBL.

Crown is now rolled
in with Burswood, but the combined operation produced EBITDA of $456
million in 2004-05, well up on the $110 million produced in 1997-98
when the Asian crisis savaged high roller earning . That said, there’s
no way by any measure it can be said PBL bought Crown for two times
earnings.

Packer’s private company was also underwater on an 8%
stake in Crown that it held at the time of the PBL takeover, although a
beautifully timed sell-down of a much larger stake a year earlier had
produced a profit of almost $200 million for ConsPress.

One
intriguing question to consider is whether Packer personally made more
money from investing in Crown than he lost betting at casinos over the
years. The Crown profits now exceed $600 million, and Lloyd Williams
once told me that he hated to think how much the Big Fella had dropped
in the London casinos. Surely, it couldn’t be more than $600 million!

If
you include betting on foreign currencies and the races, there’s a fair
chance the Packer empire could be marginally behind – but by jingo,
Kerry had a lot of fun along the way.