US giant prepares to pay $175m for SkyCity Darwin Casino
US hospitality giant Delaware North is looking to acquire the SkyCity Darwin Casino in a $175 million deal, down on the initial asking price of about $240 million.
Delaware North is believed to have recently entered due diligence to acquire the casino, knocking out other contenders, including the Morris Group and an Asian-based property development group.
The New Zealand-based SkyCity Entertainment Group, which controls six casinos and three hotels, told shareholders at last week’s annual general meeting the proposed sale is still a work in progress.
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The buyer of SkyCity Darwin gains exclusivity over Darwin’s casino licence until 2036.
Apart from the Morris Group, which has extensive luxury resorts, casinos and hotels in northern Australia, Taiwan’s Pau Jar Group was also a key party previously interested in the sale, which is being managed by Goldman Sachs.
Delaware North bought into the nation’s gaming market this year, purchasing two Brisbane pubs for more than $30 million.
The New York-based company picked up the Shafston Hotel in Brisbane’s east and the Aspley Hotel in the city’s northern suburbs.
Delaware North is known locally for owning the Lizard Island resort in Queensland, as well as food and beverage outlets across Australia.
SkyCity Darwin is thought to be worth about $210 million-$250 million even after taking a $90 million valuation hit.
Contacted by The Australian yesterday, Delaware North declined to comment.
SkyCity reported normalised earnings of $338 million in August and UBS analysts say the company’s guidance points to modest earnings growth this financial year, driven by its Australian operations and VIP unit.
The analysts caution that earnings from the company’s NZ casinos are expected to be flat, while both Adelaide and Darwin are expected to grow.
In August analysts said that indicative bids for the Darwin property were above its book value of about $195 million.
SkyCity has been selling assets and in May offloaded its Federal St car park in Auckland for $40 million.
The company has flagged its interest in expanding its hotel portfolio, initially in NZ but potentially further afield, and is seeking an investment partner in the sector.
This article originally appeared on www.theaustralian.com.au/property.
