MGM rebuked after hinting at higher offer for Wembley

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The Independent Online

The fight for Wembley intensified yesterday after a fresh £287m takeover bid for the controversial gaming group forced MGM Mirage to "consider" increasing its agreed £270m offer.

The fight for Wembley intensified yesterday after a fresh £287m takeover bid for the controversial gaming group forced MGM Mirage to "consider" increasing its agreed £270m offer.

Sol Kerzner, the Caribbean casino magnate who is fronting a rival bid consortium, launched an 800p-a-share offer for Wembley, days after increasing his stake in the group to 22.75 per cent. His move prompted MGM Mirage to test the patience of the City takeover watchdog by saying it was "considering its options, including the possibility of an offer on increased terms".

Although a rebuke from the Takeover Panel later saw MGM clarify its claim by confirming that there could be "no certainty that an increased offer" would follow, shares in Wembley surged 15p to 855p.

Claes Hultman, Wembley's chief executive, said the group would decide "by Friday" whether to switch its recommendation from MGM's bid and call off an extraordinary shareholder meeting scheduled for 8 April. "There is a compelling case for not [holding the EGM]," he said yesterday.

Although analysts have cited regulatory risk as the biggest possible hurdle to the bid from BIL Investors - a consortium comprising the US property investment firm Starwood Capital, Kerzner International and Waterford Group, a US casino developer - Mr Hultman played down that risk. "I don't have any indication that they will have a problem," he said.

Jeff Dishner, Starwood's European boss, said "no problems had surfaced" during the consortium's meetings with the regulators in Rhode Island, the eastern US state that is home to Lincoln Park racecourse and casino, Wembley's jewel asset.

BIL's offer is conditional on the group getting the green light from "relevant regulators", including the Rhode Island Lottery Commission. It filed its applications for approval yesterday but analysts said it was possible that the US regulators may find fault with the fact that Mr Kerzner earns money from a large casino business in Connecticut, which borders Rhode Island.

Mr Dishner said the group was "pretty confident" about its chances of outbidding MGM, pointing out that it had already spent more than £60m on buying shares in Wembley. It bought the stake from Active Value, the activist fund manager that was Wembley's biggest investor.

Mr Hultman said Wembley would back the bidder that created the "highest value for our shareholders".

Ultimately, Wembley's fate lies in the hands of its next three biggest shareholders - Fidelity, Morley and Schroders - which between them own more than 30 per cent.

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