NZ's Sky City Extends Bid Deadline, No Offers Yet
New Zealand casino operator Sky City Entertainment Group, which has put itself up for sale, extended a bid deadline to the end of next week, saying it had not yet received any takeover offers.
Shares in Sky City, which has been valued at up to NZ$2.9 billion (US$2.2 billion), fell nearly 6 percent on Wednesday after a media report that one of two interested private equity buyers had pulled out.
Sky City did not refer to the report, but said it had asked "parties currently undertaking due diligence" to finish up in a reasonable timeframe.
The stock fell a further 2 percent on Thursday, but a source familiar with the matter told Reuters that considerations by potential bidders had been delayed by regulatory issues in the gaming sector.
Paul Richardson, Equities Manager at BT Funds Management, said he still expected private equity would be interested in Sky City, as it was a defensive stock with good cashflows.
"It's up the buyer, not the seller, to run the process. They don't always work to investor, company or media timetables," he said, adding that there was still no guarantee a bid would be lodged.
Sky City was first approached by an unidentified potential bidder in early September after disappointing results earlier in the year and the departure of its chief executive.
It said then it would seek competing offers.
The Dominion Post newspaper reported on Wednesday that private equity group CVC Asia Pacific, one of two companies believed to be doing due diligence, one had pulled out, leaving private equity firm TPG as the only bidder.
Sky City had previously set a deadline of Nov. 27 for receiving bids, but said its board would consider any bids received at its scheduled meeting on Dec. 6 and 7.
The company has a virtual monopoly in New Zealand due to a ban on new casinos and has two establishments in Australia.
Analysts expect a takeover bid to be up to NZ$6.40 a share, valuing the company at as much as NZ$2.9 billion.
Citigroup said in a report that recent Australasian casino deals had an average EV/EBITDA ratio of around 10 times.
Australian rivals include Tabcorp Holdings,Tattersall's and Publishing and Broadcasting. Tabcorp and Tattersall's have said they are not interested.
Sky City has an enterprise value-to-earnings before interest, tax, depreciation and amortisation ratio of 11.8, compared with a ratio of 9.5 for Tabcorp and Tattersall's 13.0.
Sky City closed down 2.2 percent at NZ$4.79 on Thursday.