James Packer's Publishing & Broadcasting Ltd and Macau gaming billionaire Stanley Ho (
Expected returns from the resort, which requires a land fee of S$1.2 billion (US$722 million), "are insufficient to justify" development costs, Packer, whose company owns Australia's biggest casino, said in a statement today. Ho's Melco International Development Ltd said it plans to concentrate on its resort plan with Packer in Macau.
The decision, James Packer's first major business move since the Dec. 26 death of his father Kerry, narrows the contest for the resort to four bidders. Merrill Lynch & Co on Nov. 17 named Las Vegas-based rivals MGM Mirage, Las Vegas Sands Corp and Harrah's Entertainment Inc as the favorites. Malaysia's Genting Bhd is the remaining bidder.
"A lot of companies put their hands up initially, but the winner has to be a company that is very good at maximizing every necessary component of the casino-resort," said Sean Monaghan, a Singapore-based casino analyst at Merrill Lynch. "Very few companies are good at that."
James Packer, 38, who has been executive chairman since 1998, in the past years focused on gaming to expand Publishing & Broadcasting's A$11.1 billion (US$8.1 billion) business empire, which includes Australia's most-watched television network, magazines as well as cinemas and Internet ventures.
Last year, Publishing & Broadcasting bought Burswood Ltd., which owns Perth's only casino, for A$637 million. In Macau, it has teamed with Ho to build the Park Hyatt Hotel & Casino, and is now planning a US$1 billion underwater gambling establishment.
The decision to scrap the Singapore bid doesn't signal a change in strategy for the company, said Chris Hall, who helps manage about US$2.2 billion in Australian equities at Argo Investments Ltd in Adelaide, Australia.
"It shows that at PBL, there's no change with the passing of Kerry," said Hall, who owns Publishing & Broadcasting shares. "They're all very good at what they do and there's going to be a very rigid financial discipline they will maintain."
Publishing & Broadcasting shares rose A$0.08 to A$16.56 as of 3:24pm in Sydney. They dropped 5.8 percent last year.
Publishing & Broadcasting's withdrawal comes less than a month after Tabcorp Holdings Ltd., Australia's biggest gaming company, pulled its bid for the Singapore casino project.
Melbourne-based Tabcorp, which owns four casinos in Australia, withdrew its A$2 billion bid citing the S$1.2 billion land price, project costs and restrictions on gambling at the proposed new venue.
Costs to win the Singapore gaming license have escalated as companies add theaters and other features in their bid to control a casino in one of Asia's richest cities, which is within a six-hour flight of 2.5 billion people.
Merrill Lynch estimates the downtown casino-resort may cost US$3 billion to develop.