More than $1 billion has been added to Crown Resorts’ market value as investors speculate a demerger of the casino operator will enable billionaire James Packer to privatise part of the group.
Crown has announced plans to spin off its investment in troubled joint-venture casinos in Macau in an effort to realise the value of its casinos in Melbourne and Perth, and its Barangaroo development in Sydney.
Most of its international investments will be demerged - including a 27.4 per cent stake in the joint-venture Melco Crown Entertainment, which operates casinos in Macau and Manila - into a separately listed company.
Crown is also considering creating a new property trust for its Melbourne and Perth hotels.
The plans would leave Crown with a stronger focus on its Australian casinos, high-end London casino Aspinalls, and online gambling operations.
The company's share price over the last year has been closely tied to the weaker performance of the Macau assets, obscuring the value of Crown's other assets, CMC Markets chief strategist Michael McCarthy said.
Casinos in Macau have been hit hard by a Chinese government crackdown on corruption against officials and politically-linked businessmen, and slowing economic growth in China.
"Splitting the business allows them to realise that value, and I suspect that's why we're seeing such a positive reaction in the market today," Mr McCarthy said.
Shares in Crown gained $1.49, or 13.2 per cent, to $12.75, their highest value in 10 months.
That boosted its market value by almost $1.1 billion to $9.3 billion.
Investors are also speculating there will be a deal to take part of the group private, a move investors believe Mr Packer has been considering for some time, Mr McCarthy said.
Mr Packer's private firm Consolidated Press Holdings owns a 53 per cent stake in Crown.
"This (demerger) creates a structure that could lead to at least one more deal," Mr McCarthy said.
Mr Packer would likely want to take the Australian casino assets private, though he may also see potential in Crown's plans to build a casino in Las Vegas, Mr McCarthy said.
Crown's Alon development site in Las Vegas will be among the international investments to be demerged.