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TPG Is Looking at NZ Sky City's Books

U.S. private equity firm TPG is examining the books of New Zealand casino operator Sky City Entertainment Group, sources familiar with the matter said Friday, with any bid seen worth over US$2 billion.

Sky City has previously said it was in talks with an unnamed bidder, which New Zealand media reports had speculated was TPG. Sky City said on Wednesday a second company was now expected to examine its books, raising the prospects of a bidding war.

TPG teamed up with Apollo Management to buy the world's largest casino operator Harrah's Entertainment for $17 billion last year.

TPG was still looking at financing options for any deal, one source said, saying things were still at a preliminary stage. It was unclear whether TPG would partner with another party.

Analysts also ruled out James Packer's Publishing & Broadcasting as a likely bidder after the company released details Thursday of plans to split up its gaming and media assets.

PBL said it was in due diligence on one large gaming acquisition which analysts said was worth close to A$2 billion (US$1.8 billion), but management had told them it was not Sky City.

"We understand this does not relate to Sky City," Merrill Lynch told clients in a note.

In a booklet detailing its plans to split up its media and gaming businesses, PBL said it had A$2.7 billion in cash to spend on acquisitions

Rivals Tabcorp Holdings and Tattersall's have also said they are not interested in Sky City.

Shares in Sky City, which has a virtual monopoly on casinos in New Zealand and also operates in Australia. The stock has jumped more than a quarter since Sept. 21 when the company said it had received an approach about a possible takeover.

Analysts say a private equity bidder could offer up to NZ$5.75 a share, while a trade bidder may go as high as NZ$6.40, valuing the company at NZ$2.9 billion ($2.2 billion).