Packer sells stake in bank: Speculation over possible acquisitions after Westpac deal nets pounds 45m profit

KERRY PACKER, Australia's richest person, yesterday surprised the financial markets by selling most of his stake in Westpac, the country's oldest and largest bank, for an estimated profit of Adollars 100m ( pounds 45m).

The sale was the climax of a turbulent six months of Mr Packer's involvement in Westpac since he spent about Adollars 200m in November buying a strategic stake in the bank. He took his share to just under 10 per cent last month with the exercise of call options.

Yesterday's sale provoked a flurry of speculation about how Mr Packer plans to use his profit. Over the past few months he has spent about Adollars 125m building up a 10 per cent stake in the Sydney-based Fairfax newspaper group, making him the second-largest shareholder after Conrad Black, the Canadian proprietor of the Daily Telegraph.

He has also spent heavily on building a consortium with Rupert Murdoch and Telecom Australia, the state-owned telecommunications company, to bid for a licence in Australia's fledgling pay television industry. Mr Packer is believed to be keen to pursue a higher stake in Fairfax and to press on with the satellite television bid, despite failing to win either of the first two licences awarded 10 days ago.

The Westpac sale also ends speculation about his ultimate ambitions at the bank. Like his initial share purchase, yesterday's sale was conducted swiftly amid great secrecy. Mr Packer's company, Australian Consolidated Press, sold its Westpac shares to Lend Lease Corporation, a large financial group that owns MLC, one of Australia's biggest insurance companies.

The sale gives Lend Lease 9.95 per cent of Westpac capital, the most it is allowed to hold in a bank as an individual shareholder. The company announced it would seek agreement from the Westpac board to increase its holding to 15 per cent and to apppoint two directors. Westpac's other main investor is Australian Mutual Provident, the country's largest insurance group, which owns 15 per cent.

Robert Joss, Westpac's managing director, said: 'Westpac recognises the strong operating record of the Lend Lease group and welcomes the confidence that Lend Lease has displayed in Westpac's future through such a significant acquisition.' The bank also welcomed Mr Packer as a significant investor last November after a period of unprecedented turmoil in its fortunes. Its vigorous expansion during the 1980s ended in disaster: a Adollars 1.5bn loss for the year to last September followed by the resignation of its managing director and five other directors.

Mr Packer was invited to join the board, but resigned as a director only a week after joining it in January following a dispute with other directors over the pace of reform at Westpac. From that point, it seemed likely he would withdraw as an investor as well at the most opportune time. The share price, which was near an eight-year low when he bought in, has risen steadily ever since.

Mr Joss, formerly a vice-chairman of the Wells Fargo Bank in California, has presided over a tough programme of changes and staff cuts since taking over as managing director in January, designed mainly to return Westpac to its core business of retail banking.

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