Shares in Rank, the casino and bingo club operator, are set to soar today after it emerged that Genting International, the gaming group owned by one of Malaysia's richest families, has taken a 10 per cent stake in the struggling company.
Genting is expected to make an official Stock Exchange announcement this morning to declare its holding, which it built up over several days last week.
It is unclear what Genting's intentions are, although sources close to the situation said that it is more likely to be a stake-building move rather than the first step in a takeover.
Genting bought Stanley Leisure last year to become the largest casino operator in the UK. It also owns Maxims casino. The group, run by Lim Kok Thay, son of the group's recently deceased founder, Lim Goh Tong, could combine Rank with these assets. Market sources speculated, however, that the move may have been made as a blocking manoeuvre against a possible takeover offer from Harrah's. It emerged last month that the American gaming giant recently made an approach to Rank but was rebuffed.
Long seen as a takeover target, Rank has been made even more vulnerable by a string of negative developments. The operator of Mecca bingo clubs and Grosvenor casinos issued a shock profit warning in October, three months after the imposition of the smoking ban, which has been particularly negative for its bingo business. Many of its usual bingo patrons are smokers and have stopped going since the ban began.
The company was also hit by tighter regulations limiting the number of large jackpot slot machines.
The company's shares have more than halved since the beginning of the year, leaving it with a market value of just 392m as of the close of business on Friday.
Rank is not the only gaming business to have suffered. Riva Gaming said recently that up to 100 bingo clubs would have to shut in the coming months if the company did not receive immediate tax breaks to help offset the slowdown in business due to the smoking ban.Reuse content