Genting Bhd, a gaming company owned by Malaysia's third-richest family, will buy Stanley Leisure Plc, the largest UK casino operator, for ?483.6 million (US$901 million) to reduce a reliance on Asia as competition mounts.
Genting offered ?8.60 a share in cash for the 80 percent stake in Stanley it doesn't own, it said in a statement yesterday.
That compares with a closing price of ?6.805 on Sept. 1, the last trading day before the UK company said it had been approached by a suitor it declined to identify.
Gaming acquisitions surged more than fourfold this year to US$3.4 billion in Asia, where Genting is one of four bidders for Singapore's second gaming resort to add to its mountaintop casino in Malaysia. Liverpool, England-based Stanley has 44 casinos in the UK, where the government plans to issue 17 new licenses.
"Genting has been cooped up in Malaysia for too long, enjoying a monopoly status," said Kenny Yee, an OSK Research Sdn analyst in Kuala Lumpur. With rising competition from Macau and Singapore, it has to "diversify and the UK offers tremendous growth."
Justin Leong, head of strategic investments at Genting Bhd, declined to comment when contacted on his mobile phone.
The purchase comes after Harrah's Entertainment Inc, the world's largest casino company, offered to buy London Clubs International Plc for ?279.3 million. The bid led to the ending of merger talks between Stanley and London Clubs.
Genting International owns almost 30 percent of London Clubs in addition to its stake in Stanley, which operates the Crockfords casino in London. It already has a venture with Stanley to bid for regional outlets in the UK
The Stanley acquisition "provides Genting the avenue to diversify from its Malaysian casino base and to participate in the anticipated brisk growth in the under-penetrated casino business in the UK as deregulation seeps in," Vincent Khoo, head of research at Hwang-DBS Vickers Research Sdn, said in a note yesterday.
The price for Stanley is "fair," Khoo said. The implied price as a multiple of earnings is 25.8 times and 22.7 times on next year and 2008 consensus forecasts, which "reflects the brisk growth anticipated" for the company, he said.
Stanley's board will recommend its shareholders to accept the offer which it considers to be "fair and reasonable," Genting said in a statement yesterday.
Asia's gambling market is opening up to more international competition, with companies such as Wynn Resorts Ltd and Las Vegas Sands Corp tapping markets including Macau, where gaming revenue may grow 21 percent to US$7 billion this year, according to a July 18 Morgan Stanley report.
Casino revenue in Macau has surged since 2004 when Las Vegas Sands and Galaxy Entertainment Group Ltd opened resorts there, ending billionaire Stanley Ho's four-decade monopoly in the city.
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