National keeps top earners to tempt suitor TabcorpHOTELS VANDA CARSON November 21, 2009 THE pub operator National Leisure and Gaming is preening itself for a possible takeover by the gambling giant Tabcorp by allowing those hotels which generate little gambling income to be sold by its landlord, but ensuring it keeps the top earners.
In the past week the Royal Hotel at Ryde, the Canterbury Hotel, the Lidcombe Hotel and the Bridgeview Hotel in Willoughby have been sold by landlord Hedley Leisure and Gaming without National Leisure and Gaming taking up its right to match the offer.
But when Hedley comes to sell its top-earning poker machine hotels in the coming months, National is expected to ensure it retains them.
It is part of its strategy to protect its best assets to ensure it remains an appealing target for suitor Tabcorp, which is eyeing a move into pubs to dampen the impact of the loss of its Victorian gambling licence.
Tabcorp is also eyeing the $200 million hotel portfolio now owned by Wesfarmers, which inherited them from its takeover of Coles Group.
National Leisure and Gaming is expected to protect those 16 hotels of its 36 leasehold pubs in NSW and Queensland which are its biggest gambling earners.
If Tabcorp moves on National it would be buying at the bottom of the market and would acquire more than 900 poker machines.
National has a market capitalisation of $15 million but was worth $370 million when it floated four years ago.
Hedley Leisure and Gaming leases NSW's biggest poker machine earner to National Leisure and Gaming, the El Cortez Hotel at Canley Heights. The hotel is valued at $23.3 million in Hedley's accounts.
The El Cortez turns over about $93.6 million a year through its machines, or $1.8 million a week. This produces $8.6 million in net profit for the hotel a year, or $165,000 a week, from which the hotel pays taxes and repair costs. Even a hotel in the 200th spot has turnover of about $600,000 a week through its machines for a $50,000 net profit a week.
Two hotels that National Leisure and Gaming is expected to bid for in the next month are the Cabramatta Inn at Cabramatta, ranked ninth in the state in terms of poker-machine revenue, and the Mount Druitt Cedars Tavern in Emerton in Sydney's west, 110th in the rankings released in September.
Both hotels were provisionally sold on Thursday, but National has 28 days to take up its rights to match the price.
Publican and former rugby league player Steve Bowden paid $21 million for the Cabramatta Inn on Thursday. The Cedars Tavern sold for $12.5 million to an unknown buyer.
