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Packer-backed business buys stake in The Star

Tue, Jul 18, 8:33am by Senior Writer

The rumours of a possible Crown Resorts takeover of major rival The Star are growing stronger after a James Packer-backed business took a stake in the Sydney-based casino.

Packer may be only a 25 per cent shareholder in Ellerston Capital, but the decision of the investment company to claim a 5 per cent stake of The Star has certainly set tongues wagging.

Crown is solely focussed on its Australian businesses after a disastrous end to its international expansion when 16 of its staff, including three Australians, were detained and then convicted for gambling crimes in China.

While it already has casinos in Melbourne and Perth and is building a VIP casino in Sydney, the only way it could expand its business significantly within Australia would be to buy out a rival.

The Star, which operates casinos in Sydney, Gold Coast and Brisbane, is the main rival and has come on the radar as a possible target for acquisition by Crown.

Packer, the 49 per cent shareholder of Crown, may have no influence of Ellerston investment’s decisions, but the man who run the company, Ashok Jacob, is a confidant of the casino mogul.

He has also served on the Crown Resorts board.

Malaysian tourism and gambling giant Genting, sold 6.4 million shares in The Star at $5.07 in a block trade last week and Ellerston snapped up some of them, while another investment firm, Perpetual, also bought up the stick.

Ellerston had already taken a small interest in The Star in April and reported then it felt it had good prospects for growth.

“We see solid growth prospects for Star, driven by its capital investment program and growth strategy,” Ellerston said in its newsletter.

It is not the first time that a Packer business has taken a strategic stake in The Star, with Crown acquiring a 10 per cent stake in then Echo Entertainment back in 2012 and then gaining approval to grow it to 23 per cent.

However, once it became clear that Packer’s plans for a second casino in Sydney would be approved, he dropped the stake.

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