Genting stalks Australia’s Echo as Packer lurks
MELBOURNE, June 26 – Malaysian gaming group Genting Group has applied to raise its stake in casino operator Echo Entertainment, potentially pitting it in a US$3 billion-plus (RM9.60 billion-plus) takeover battle against Australian billionaire James Packer.
Genting, Southeast Asia’s largest gaming group, has applied to increase its stake in Echo above the 10 per cent threshold for a single shareholder, the New South Wales Independent Liquor and Gaming Authority said today, confirming an earlier report.
That puts it on par with Packer who is seeking to gain control of Echo, which owns Sydney’s only casino as well as casinos in Queensland state. Packer is hoping to attract more Asian high-rollers to Sydney and Genting may want to set up its own VIP room there.
“Genting has been seeking expansion opportunities both in Asia and the USA and this evolution into Australia is not surprising at all,” said Jonathan Galaviz of US-based economics consultancy Galaviz & Co. He had previously advised casino firms bidding for licences in Singapore.
“Genting, through its affiliated entries, has a tremendous amount of cash to deploy into the sector globally,” he added.
Under Echo’s constitution, no single party can hold more than 10 per cent without regulatory approval. Gaining the approval of the New South Wales state authority may take several months.
Analysts have said Genting probably wants to keep its options open on Echo and may not be considering a full bid.
Packer’s company, Crown, applied to increase its stake beyond 10 per cent on Feb. 24. A public comment period ended in late May and the state authority has not said when a decision will be made.
Genting Group, controlled by its chairman, Lim Kok Thay, has built a war chest of S$3.9 billion ($3 billion), leading to speculation it may be preparing for an acquisition.
Asia’s casinos generate about US$45 billion in annual revenue, and Packer, Genting and Las Vegas rivals such as Sands are racing to expand in the region.
Genting has built its stake in Echo through its units in Singapore and Hong Kong. Genting Hong Kong owns Star Cruises and holds a stake in Philippine casino, Resorts World Manila.
Genting Singapore owns Resorts World at Sentosa, the world’s third-most expensive casino complex and one of the most profitable.
Echo shares fell 0.2 per cent in a broader market that was down 0.4 per cent. Genting Group shares fell 1 per cent in Kuala Lumpur, while Genting Singapore shares were 0.4 per cent lower. – Reuters