Casino Operator Moves Forward with Cost Restructuring, Asset Sales, and Strategic Priorities Following FY26 Results
Australia and New Zealand-listed casino operator SkyCity Entertainment Group has officially confirmed that it rejected two takeover proposals received earlier this year in May. Following media speculation, the board addressed the unsolicited bids, noting that they failed to reflect the true underlying value of the business.
Details of the Takeover Proposals
- Oaktree Capital Management: The first proposal came from a special situation fund managed by Oaktree Capital offering NZ$0.70 (£0.31) per share, valuing the company at approximately NZ$772 million (£315.7 million). Oaktree had previously pursued similar acquisition bids for Crown Resorts and Star Entertainment Group.
- Iris Capital: The second proposal of NZ$0.75 (£0.33) per share was reportedly submitted by Sam Arnaout’s Iris Capital, owner of various Australian pubs, hotels, and casinos—valuing SkyCity at roughly NZ$827 million (£361.7 million).
Both offers were subject to extensive conditions, including at least eight weeks of due diligence and arranging debt financing, against a backdrop where SkyCity’s latest financial statement lists existing debts of NZ$591 million (£258.4 million). Furthermore, both bids included restrictive conditions that would have prevented the company from pursuing its planned asset divestments.
Board Decision and Strategic Focus
Following a comprehensive review alongside management and financial advisers, the SkyCity Board unanimously determined to reject both offers.
A board statement emphasized:
“The SkyCity Board carefully considered these indicative proposals, with input from management and advisers. The Board unanimously determined that these proposals did not adequately reflect the underlying value of the company, and that the conditions were problematic.”
Instead of pursuing a sale, SkyCity is fully committed to the strategic priorities outlined in its recent FY26 financial results. This includes advancing major asset sales, such as the 99 Albert Street office building and Victoria Street Investment expected to yield between NZ$275 million and NZ$300 million (£120 million to £131 million), alongside a non-binding agreement for the sale of the Grand Hotel.
Financial Performance and Cost Reset
SkyCity‘s FY26 financial report revealed a 36% decline in net profit down to NZ$18.2 million (£8 million), despite overall revenue increasing 6.5% to NZ$878.9 million (£384.4 million). EBITDA dropped 44.2% to NZ$120.5 million (£52.7 million), falling short of revised estimates released in May due to softer gaming revenues, expenses related to the New Zealand International Convention Centre, carded play rollouts across New Zealand properties, and an AU$21 million regulatory settlement with the South Australian Commissioner for Liquor and Gambling regarding Adelaide Casino governance.
To counter these pressures, the operator is driving an internal operating model reset aimed at securing NZ$30 million (£13.1 million) in operational benefits during FY27. Despite the challenging profit figures, investor sentiment has shown optimism; SkyCity’s share price climbed 15% over the five days following its results release, currently trading at NZ$0.68 (£0.30).
