Malaysians bid for Stanley Leisure

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The Independent Online

Stanley Leisure, the owner of the exclusive Crockfords casino in London, has received a takeover offer from Malaysia's Genting conglomerate, as foreign companies scramble to take positions in the UK gaming market before deregulation of the sector.

Genting, one of leading companies in Malaysia, already has a 20 per cent stake in Stanley Leisure and was believed to be supportive of the British company's previous merger talks with London Clubs International, in which Genting holds a 30 per cent stake.

However, those talks were terminated abruptly last week after London Clubs agreed to a £279m takeover offer instead from Harrah's Entertainment, a US giant in the gaming industry that owns the Las Vegas Coliseum. At the time, Harrah's showed no interest in Stanley Leisure, while Genting made no pronouncement on the American company's offer for London Clubs.

Stanley Leisure shares closed up 18 per cent at 811p yesterday, valuing the company at £570m, after it admitted receiving a bid but did not identify its suitor. The broker Altium Securities pointed to a take-out price of 900p or £633m, applying less than half the multiple that was agreed by Harrah's for London Clubs.

The company said in a statement: "Stanley Leisure plc notes the recent movement in its share price and confirms that it has received a proposal concerning a possible offer, which the board is currently evaluating."

Genting has interests ranging from palm oil production to paper manufacturing. In the leisure sector, it developed the Genting Highlands resort, situated about 58 kilometres from Kuala Lumpur, and it has gaming interests in Malaysia and abroad.

In London, Genting owns Maxims Casino Club, a high-end gambling venue in Kensington, west London. Last year it also bought a number of properties close to Maxims for £109m. Genting was founded in 1965 by Tan Sri Lim Goh Tong, whose family holds a 41 per cent stake in the holding company, which has listed businesses in Malaysia with a combined stock market capitalisation of some £6.5bn. Group revenues last year were RM5.5bn (£786m).

Stanley Leisure is the largest casino operator in the UK with 45 casinos trading throughout Great Britain, 41 in the provinces and four in London, including the prestigious Crockfords in Mayfair. Last year it sold its retail betting division to William Hill.

Stanley has said that its "strategy is to focus on expanding its UK casino business by taking full advantage of the new deregulation environment". Those ambitions may be better served by being part of a larger group with greater financial firepower. The UK industry is competing for the single "super-casino" licence that it is to be awarded by the Government's Gaming Commission.

The organisation will also grant licences for eight small and eight large sites. Due to the legislation surrounding the industry, the only way for a new competitor to enter the UK casino business is to win one of the 17 new casino licences or buy an existing company,

Analysts said that the moves on London Clubs and Stanley Leisure highlighted the interest of international operators in the UK. Wayne Brown, an analyst at Altium Securities, pointed out that the world's five biggest gaming groups - Genting, MGM Mirage, Kerzner, Harrah's and Starwood - all operate in fairly mature markets. UK casinos can expect an impressive increase in membership and demand, once they are allowed to advertise from next year, he said.

MGM has proposals on the table in three of the shortlisted cities for a super-casino: Sheffield, Glasgow and Newcastle. But should the licence get dished out to one of the other four - Blackpool, London, Cardiff or Manchester - MGM's game plan could change. Analysts said buying Stanley Leisure offered a one-off opportunity to make a sizeable entry to the UK casino market ahead of deregulation.

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