Wembley tumbles as Kerzner withdraws £309m bid

The future of Wembley, the stadium turned racecourse owner, was in turmoil yesterday after the US investment group that had agreed a £309m takeover pulled out of its bid.

Shares in Wembley collapsed by more than a third, wiping £108m off the company's value, on news that BLB Investors, which includes the South African casino magnate Sol Kerzner, was letting its 860p a share offer lapse. It said the "political environment" in Rhode Island, where Wembley's main asset, Lincoln Park, is situated had become "highly uncertain".

It is understood that BLB's problems with Rhode Island stem from attempts by another casino chain, Harrah's, to develop a rival resort in the same area. The local authorities are believed to have given this new casino a substantially lower tax charge than Lincoln Park, putting BLB at a significant operational disadvantage.

The decision to withdraw has cost BLB dear. It has a 22 per cent stake in Wembley, which it bought from Active Value at 800p a share. With shares closing at 541.5p yesterday, BLB suffered a loss on its investment of £20m. Jeff Dishner, of BLB, said, "We are clearly disappointed with the outcome. However, BLB is committed to working with Wembley to maximise shareholder value over the long term."

The withdrawal comes after a lengthy battle to win Wembley from the clutches of MGM Mirage. MGM originally offered 750p a share in January, which was agreed by the board. It later raised its offer to 840p a share, only to be outbid by BLB's 860p a share cash offer in April. BLB said it had support from 83 per cent of shareholders after last week's deadline for acceptances. It needed 90 per cent to go ahead with the deal, and although it was likely to win enough support had it extended the deadline, it has decided to withdraw.

MGM may return to the bidding table, although it has just completed an $8bn deal for Mandalay casino in Las Vegas. Analysts believe any new offer for the company would have to be at a substantially lower price.

BLB's withdrawal also came as a surprise to Wembley, which had expected regulatory approval for the deal to go ahead. Lincoln Park accounts for 90 per cent of Wembley's profits, and the board had put the business up for sale after deciding it could not compete with US casino groups.