Australian Echo wants James Packer bid for board seat rejected

Echo has scheduled a shareholder vote on July 20 and recommended shareholders vote against a resolution by Pennwin, a unit of Packer controlled casino group Crown, to remove Echo chairman John Story and induct its nominee Jeff Kennett.

"These moves by Crown should be viewed through the prism of its ardent desire to gain control of Echo's valuable license without paying a premium to Echo shareholders," Story said in a statement. "We do not believe that it is in the interests of shareholders that a competitor be represented on the board."

The friction between Crown and Echo, which runs Jupiters casino on Queensland's Gold Coast and Sydney's Star casino, started after Crown doubled its stake in Echo to 10 percent in February and said it would seek government approval to raise it further. Packer's proposal for a board seat was rejected then by Echo.

The matter came to a head when Packer said Story should be held responsible for reputational damage to Echo and be removed. "It's obvious what Packer's trying to do is gain some control without paying a premium for control," said Jason Beddow, managing director of Argo Investments, which owns shares in both Echo and Crown.

"There's a long way to go. He needs legislation to be changed," Beddow said, referring to state laws that need to be lifted before Crown can raise its stake and move to take over Echo.

Crown owns the Crown casino in Melbourne and Burswood in Perth and about a third of Melco Crown Entertainment, which has fast-growing casinos in Macau. A full takeover by Crown would cost upwards of us$ 2.62 billion and likely face scrutiny by Australia's competition authorities.

Echo has been seen as a likely takeover target because of its size and is considered a potential fit for Crown or for other international casino groups or private equity firms especially on completion of the us$ 870 million renovation of its Sydney casino to attract Asian high-rollers.

A spokesman for Packer was not immediately available for comment.