Taverner bid slips from Sky City's lips

Sky City has raised the ire of the Stock Exchange after a loose-lipped director revealed to media the casino operator was interested in buying Australian pub company Taverner Group, well before the news was disclosed to the market.

Sky City chairman Rod McGeoch let slip in an interview with Bloomberg that it was aiming to buy Australia's second-largest pub group.

That report appeared on newswires 17 minutes before the news was disclosed to the Stock Exchange.

Sky City said it moved to remedy the situation as soon as it realised what had happened. The Stock Exchange is currently considering its next move.

Mr McGeoch said Taverner, which owns 32 hotels and 2000 poker machines in Victoria, South Australia, and New South Wales, would fit well with Sky City's existing hotel and gaming business.

Taverner could fetch as much as A$350 million ($385.71 million) in a bidding match which will likely pit Sky City against retail giant Woolworths and two private equity firms -- thought to be The Carlyle Group and a Deutsche Bank private equity fund.

Sky City said the bids were due by today and it could be several weeks before the successful bidder was announced.

One analyst spoken to by the New Zealand Herald said there were some aspects of Taverner that would complement Sky City's business, namely the liquor retailing and gaming side.

The analyst, who asked not to be named, said for Sky City to buy an acquisition of that size, it would need to issue equity for at least part of the cost. This could involve either a book build or a rights issue.

But another analyst doubted that Taverner's assets would fit snugly within the Sky City fold, saying the casino operator would do better to concentrate on improving the performance of its previous Australian acquisitions.

Sky City shares closed down 9c at $4.78 yesterday, against a broader market down one per cent.

Mr McGeoch made the comments to a reporter after Telecom's annual meeting in Christchurch. Once the comments were made public, the casino operator had little choice but to advise the rest of the investment community in a stock exchange announcement.

The exchange asked Sky City to explain why it released its plan to bid to an individual rather than the entire market, an apparent breach of market disclosure rules. It will decide today whether to take further action.

It noted that trading in Sky City shares had been low in the time between Mr McGeoch's comments and the general announcement, and that the share price had not moved significantly.

- NZPA