Skyline buys out partner SkyCity
Skyline Enterprises has bought the other half of Christchurch Casino for $80 million from co-owner SkyCity Entertainment.
The deal resolves a difficult relationship between co-owners in which SkyCity pursued Skyline, one of the South Island's largest tourism operators, to sell its stake for several years.
Skyline consistently rebuffed the approaches and has now turned the tables.
SkyCity announced it had sold its 50 per cent stake to Skyline late yesterday.
It also announced it had bought out Skyline's 40 per cent in Queenstown Casino for $5m giving it 100 per cent control of the Queenstown operation.
SkyCity chief executive Nigel Morrison said the company had always preferred to own its businesses 100 per cent.
Skyline chairman Ken Matthews said the company would fund the $80m purchase with debt.
It was a significant acquisition for Skyline which had held a stake in Christchurch Casino since its beginning in 1994.
No management changes were contemplated as a result of the purchase, Matthews said.
The sale discussions started about nine months ago over lunch, Matthews said. The meetings were regular ones between the co-owners and discussions involved the future of the company.
Skyline indicated it preferred to be the buyer and from there it was a matter of how much, Matthews said.
While the Christchurch business had suffered in 2011 because of the earthquakes, trade was now only about 4 per cent below where it was before the quakes.
The company had a lot of confidence in the future of the business, he said. "Christchurch is a great location. It's got a huge future."
Asked about the relationship with SkyCity, Matthews said the relationship between the two had been very good in the last few years. There was a change of management at SkyCity and he believed that had helped "end the demeanour between the parties". Skyline had a high regard for SkyCity, he said.
In a letter to Skyline shareholders, Matthews said while the directors had outlined the difficulties in Christchurch they considered that there is an upside in the rebuild of the inner city in particular, "and have full confidence that in time the region will regain its former status."
SkyCity chief executive Nigel Morrison said: "We have said for some time that we prefer to be outright owners of the properties we are involved in.
"Skyline expressed an interest in acquiring SkyCity's 50 per cent stake in Christchurch, which fits with our strategy. We thank Skyline for the good working relationship we have had with them over many years and wish them well with Christchurch Casino," he said.
In an earlier development, SkyCity shares surged after a deal was struck allowing the gaming company to expand its operation in Adelaide. Shares closed up at $3.79.
Importantly, the agreement allowed it to compete in the premium market, Morrison said, through cashless gaming technology, a new "six-star" hotel it planned to build, high-end retail spaces and restaurants and exclusive gaming lounges.
In New Zealand the Auditor-General's Office is investigating the Government's deal with SkyCity to build a $350m national convention centre in return for more gaming machines at its Auckland casino.