James Packer’s Publishing & Broadcasting Ltd., Australia’s biggest casino owner, agreed to buy gambling venues in Canada for CAD 1.37 billion (USD 1.2 billion) in its first foray into North America.

Packer, Australia’s richest man, joined with Macquarie Bank Ltd. to buy Gateway Casinos Income Fund, a casino operator in Western Canada, for CAD 886 million, according to a statement today. The venture also will acquire two closely held casino managers run by the Burnaby, British Columbia-based company.

The acquisitions are Packer’s first since he sold half of Publishing & Broadcasting’s media assets to a buyout firm in October to fund his international gaming expansion. Today’s purchase gives him nine casinos in British Columbia and Alberta. He’s already developing three casinos in Macau through a venture with Lawrence Ho’s Melco International Development Ltd.

„If you are in the gaming space you might as well have a network of properties globally,“ said Rob Patterson, who manages USD 2.5 billion at Argo Investments Ltd. in Adelaide, including Publishing & Broadcasting and Macquarie stock.

Gateway Casinos units surged CAD 4.97, or 25 percent, to CAD 25 at 3:59 p.m. in trading on the Toronto Stock Exchange.

Publishing & Broadcasting, which owns the Crown in Melbourne, Australia’s biggest casino, last month restructured its gaming unit to focus on expansion offshore.

Slot Machines

Casino revenue in British Columbia is forecast to almost double to CAD 1.17 billion by 2008, from CAD 628 million five years earlier, after the state removed restrictions on the number of table games and slot machines for each casino and as larger gambling houses are developed, Gateway said on its Web site, citing the government-owned British Columbia Lottery Corporation.

„We see Gateway as a great opportunity for PBL to enter the North American gaming sector,“ Rowen Craigie, who heads the Sydney-based company’s gaming unit, said today. Seven of the nine casinos operated by Gateway are in British Columbia.

Publishing & Broadcasting and Macquarie offered to pay CAD 25.26 a share in cash for Gateway, 26 percent more than the company’s closing price yesterday, and agreed to buy the fund’s convertible debentures. They’ll fund the acquisition by each contributing CAD 195 million, and together taking on external debt of CAD 975 million.

Shares of Publishing & Broadcasting rose 36 cents, or 1.8 percent, to AUD 20.21 at the close of trading in Sydney. Macquarie’s stock gained AUD 1.69, or 2.1 percent, to AUD 84.18.

„Deals To Come“

Gateway was advised by CIBC World Markets Inc., the investment division of the Canadian Imperial Bank of Commerce. The venture, know as New World Gaming Partners Ltd., was advised by Macquarie.

Forming the venture with Sydney-based Macquarie, Australia’s largest securities firm, helps Packer finance the acquisition, while giving the investment bank access to the cash-flows from Gateway’s casinos, which operate more than 3,000 slot machines and electronic games.

„The deal is in line with PBL‘s strategy of expanding offshore,“ said Fraser McLeish, an analyst at ABN Amro Holding NV in Sydney. „Maybe that’s a sign there’s more similar deals to come with Macquarie.“

Macquarie, the world’s largest private manager of infrastructure, has been active in Canada since 1998, and has 200 workers in the country. The company sells residential mortgages to Canadians as well as running funds that own infrastructure assets, including Ontario’s Cardinal Power plant and stakes in highway projects in British Columbia and Alberta.

Gaming Regulators

The Sydney-based bank bundles assets into funds it oversees for investors and manages for a fee, including the Indiana Toll Road and the Chicago Skyway in the U.S. It sold AUD 1.3 billion (USD 1.1 billion) of assets into funds since Sept. 30 and bought about AUD 990 million of assets in the same period, Chief Executive Officer Allan Moss said Feb 6.

Gateway’s board endorsed the deal, and about 31 percent of shareholders have already agreed to the offer, the Canadian company said in a separate statement. Clairvest Group Inc., a Toronto-based merchant bank, said it will sell its 5.7 percent stake in Gateway, as well as a 28 percent interest in one of the casino managers, for CAD 130 million.

The transaction needs the support of 66.6 percent of Gateway’s shareholders, and the approval of gaming regulatory authorities in British Columbia and Alberta.

In Western Canada, provincial governments contract third- party operators such as Gateway to build and run casinos, paying them fees equal to a percentage of revenue.

Gateway was formed in 2002. Its casinos include the Palace in Edmonton, Alberta, and the Burnaby in Greater Vancouver. The fund increased net profit by 12 percent to CAD 40 million in 2006 as sales rose 31 percent, helped by the acquisition of the Cascades Casino in Langley, British Columbia.