Crown has saved USD 1.4billion when they pulled out their bids from 3 US casinos instead of striking a smaller deal.
Larry Gandler, a Credit Suisse analyst said that Crown has a capacity to produce 1.79billion USD acquisition from multiple of 7x earnings before interest, taxes, depreciation and amortization. He also confirmed that Crown saved an equivalent of 70cents per share when they did not proceed with the Cannery acquisition. He estimated that Crown would have been overpaid by 700million USD.
There may be plenty of bargain deals in the US casino market but it is still regarded too risky until revival started to show signs of revival.
Mr. Gandler suggested that Crown should look at the Australian market instead of pushing deals with US and China, where the City of Cream resort is due to open in June. It would be difficult for Crown to deal with potential sellers in the US. Their entry to North America is considered disaster with almost 1billion USD of value vanished.
If team up with Tatts Group, Crown can carve up an entity and they can be able to fund an acquisition to Tabcorp, owner of Sydney’s Star City casino. This deal that has been suggested for years can be a complicated one and can be described as “low probability”.
An analyst of US gambling industry said that the pullout of Crown did not actually reflect poorly on Cannery, which emerges from the rubble of the deal $US370 million richer and still in possession of its four casinos.
“Cannery was one of the rising companies in the gaming industry. Cannery’s going to proceed ahead, this time with a much fatter bank account,” the senior vice-president of Spectrum Gaming Group, Joseph Weinert told the Pittsburgh Tribune-Review.
Crown shares closed at $5.90 on Friday which is 70cents higher.