Sun City king Kerzner emerges as possible rival Wembley suitor

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The Independent Online

Sol Kerzner, the Caribbean casino and slot machine magnate who founded Sun City in South Africa, emerged yesterday as a potential bidder for Wembley, the gaming and racetrack group, after acquiring an 8.1 per cent stake through a consortium including his cousin, Len Wolman.

Sol Kerzner, the Caribbean casino and slot machine magnate who founded Sun City in South Africa, emerged yesterday as a potential bidder for Wembley, the gaming and racetrack group, after acquiring an 8.1 per cent stake through a consortium including his cousin, Len Wolman.

Mr Kerzner's move may spur other shareholders into action, including Fidelity, Morley and Schroders who between them own more than 30 per cent of the Wembley group. These shareholders may now force the company's directors to hold an auction of the business.

A bid from Mr Kerzner's consortium, BLB Investors, at 800p a share would value Wembley at £277m, scuppering a recommended offer for Wembley made in January by MGM Mirage, the Las Vegas casino operator, worth £260.5m.

However a BLB offer is not straightforward. Mr Kerzner and Mr Wolman have together developed a large casino business called Mohegan Sun in the US state of Connecticut, which adjoins Rhode Island, where Wembley has its prime asset, the Lincoln Park racetrack and casino. Taking control of Lincoln Park would give the pair a dominant position in the area and could fall foul of regulators.

Other shareholders in Wembley, however, may feel that their stakes are worth more than the 800p a share that Active Value is being paid for its key strategic stake. Speculation last night centred on Fidelity, Morley and Schroders who could instigate a full-blown auction for Wembley.

BLB Investors includes Waterford Group, run by Mr Wolman, a close business associate of Mr Kerzner, and Starwood Capital, a US real estate fund run by Barry Sternlicht, who also founded Starwood Hotels, owner of the Sheraton chain.

Active Value, a fund manager, had a 22 per cent stake in Wembley, and BLB has an option to buy more of that stake and take its Wembley holding up to 14.98 per cent, the maximum it is allowed to buy from one fund manager in a single transaction under the so called "Dawn Raid" provisions. Should BLB wish, it will be allowed to buy the rest of Active Value's stake in seven days' time.

BLB said it paid 800p a share for the Active Value stake and has now approached the Wembley board to carry out due diligence and to examine the feasibility of making a recommended offer for the group.

Mr Kerzner is a larger-than-life figure on the gaming scene, having founded Sun City in South Africa's Bophuthatswana homeland, which offered racially mixed holidays out of reach of South Africa's apartheid laws.

Mr Kerzner has since developed a new resort in the Bahamas called Atlantis, which includes the Caribbean's largest casino, 35 restaurants and 2,300 hotel rooms.

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