KEY POINTS:
SkyCity Entertainment went beyond putting a For Sale sign in front of the Sky Tower yesterday - it turned the casino company into an open home.
SkyCity has agreed to open its books to allow a potential buyer to do due diligence.
Nobody will be surprised that SkyCity
has upped the ante from last Friday's notice to the NZX, but some market players are surprised it has opened the door so wide.
"It's a bit forward," said one senior market analyst who would not be named.
"It's quite a risky move for the SkyCity board who are telling everybody so loudly the business is for sale while there are issues with the business, including the absence of a CEO.
"And it is almost saying that the bid value from the initial approach is sufficient. Things do not usually happen this way.
"Investors grumbled last week when Sky slipped a mention of potential interest into an innocuous market declaration about a profit-sharing deal. They called for more details."
Last week, SkyCity said the potential bidder was after 100 per cent of the company and on early indications would provide a significant premium on the share price. At the time it stood at $4.35 but soared to close yesterday at $5.22.
Yesterday, SkyCity issued another statement to the NZX saying it had agreed to the unnamed interested party taking due diligence.
It gets the thumbs up: "The board advises that it considers the interested party to be credible and its approach to SkyCity to be genuine.
Then SkyCity goes further: "We will consider approaches from other parties interested in acquiring control of or merging with SkyCity."
Despite the red carpet welcome for potential buyers, investors did not advance on the sentiment last week.
Brook Asset Management - a company that has been on the sideline of a few mergers and acquisitions recently and has a significant stake - approved of the approach.
Partner Simon Botherway expected that if an offer were to emerge from a trade buyer it might include shares, while private equity would offer cash.
If SkyCity had decided to canvass one buyer it might as well go through a full offer, said Paul Robertshawe of Tower Asset management. "For a minority shareholder the cashflow of this business has not been what it should have been."
It was not surprising that it had been trading at around $4.35 before the approach, he said.
Although SkyCity is respecting the wishes of the potential buyer for anonymity, two private equity companies have been named as potential suitors.
One is TPG Newbridge - already in the process of buying Harrahs in the US.
Also US-based, Providence Equity Partners has said it is interested in the company but that it was not the party included in the declaration by SkyCity last week.
