Genting raises Echo stake to near 10pc
SINGAPORE, June 19 – Genting Group has increased its stake in Echo Entertainment to almost 10 per cent, sources with knowledge of the matter said, putting the Malaysian gaming operator on par with billionaire James Packer seeking to gain control of the Australian casino operator.
Packer, who already owns 10 per cent of Echo through Crown Ltd, wants to use Echo’s licence to build a new casino complex in Sydney to attract more Asian high-rollers and has already ousted the firm’s former chairman.
“There may have been an agreement between Genting’s KT Lim and Crown’s James Packer that each group would hold a 10 per cent blocking interest for now and wait to see what develops,” said Peter Esho, chief market analyst at City Index.
The pact could fend off potential hostile takeover bids, he said.
Australian media previously reported that Genting Chairman Lim Kok Thay, also known as KT Lim, had met with Crown officials in Macau to discuss their interests in Echo.
Genting bought 2 per cent of Echo, or 13.8 million shares worth around A$60 million (RM192.14 million), in a single trade this morning with Malaysian broker CIMB facilitating the deal, according to one of the sources and brokers in Sydney.
That follows a block trade by Genting’s Hong Kong unit yesterday for 19.26 million Echo shares, or about 2.8 per cent of the Australian company, worth A$82.6 million, according to a stock market filing by Genting Hong Kong.
Genting Singapore, another Genting unit, previously held an unspecified amount of Echo shares, which analysts say amounted to 4.9 per cent. By that calculation, the latest deals would take Genting Group’s stake through various group firms to 9.7 per cent.
Under Echo’s constitution, no single party can hold more than 10 per cent and will need a regulatory nod to go further.
Genting probably has not made any firm decision on what to do with Echo but expects to gain regardless of whether it takes control of Echo or sells its stake later, said a Singapore-based analyst, who declined to be named.
Packer’s hands were tied until regulatory approval was granted to increase its stake in Echo, a source close to Crown said, declining to be identified because the information is confidential.
The permission may take at least a “few months” but added Packer is keen to work with Genting, the source said.
Genting would be keen to avoid a messy takeover battle for Echo which could cost as much as A$4.5 billion, AmResearch analyst Gan Huey Ling wrote in a note yesterday.
“As Echo is currently undergoing a debt restructuring programme, we reckon that it is unlikely that Crown or Genting Singapore would be making any takeover moves,” she added, referring to Echo’s new share offering currently underway to raise about A$454 million.
Echo shares fell 1.9 per cent to A$4.25 on five times its average daily volume, while the broader Australian market closed 0.3 per cent lower.
Genting Hong Kong, which is listed in the former British colony, is the Genting unit that 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. – Reuters