MELBOURNE/SINGAPORE: Singapore gaming operator Genting said today it had taken a stake in Echo Entertainment, raising the prospect of a battle for control over the US$3 billion Australian casino company with billionaire rival James Packer.
Packer, who wants to use Echo’s licence to build a new casino complex in Sydney to attract more Asian high-rollers, has been agitating for change at Echo after building a 10% stake in the company, and on Friday succeeded in ousting the company’s chairman.
Analysts speculated that Genting, Southeast Asia’s largest gaming group, was preparing for an acquisition, having built up a war chest of S$3.9 billion (US$3.1 billion), and said Echo’s Sydney casino would be the prize.
Genting, like its rivals such as Las Vegas titans Sands and MGM Resorts, are racing to dominate the Asian casino world – considered the most fertile ground for gambling with about US$45 billion in annual revenue up for grabs.
“I don’t think they are going to work with Packer. Echo’s main asset is Sydney and there is no reason for either Packer or Genting to want to give up Sydney,” said an analyst in Hong King who was not authorised to talk to the media. “Both of them are going to be fighting for Echo’s crown jewel,” he said.
A Genting spokeswoman declined to comment on whether the company was considering a takeover offer or disclose its stake, but Genting said in a statement the total value of its investment in publicly quoted securities was S$298 million (US$234 million).
The Australian newspaper said earlier that Genting had built up a 4.9% stake in Echo, which runs Sydney’s Star casino and Jupiter’s on the Gold Coast of Australia.
“At this juncture it does seems like a possibility,” Loke Wei Wern, a CIMB Research analyst based in Kuala Lumpur, said of a Genting takeover bid. “They have that war chest and will have to deploy it soon.”
Genting Group, whose biggest assets are Malaysia’s Genting Highlands casino complex and Singapore’s S$6.6 billion Resorts World at Sentosa, also has stakes in Resorts World Manila and several UK casinos.
Genting missed out on a concession in Macau over a decade ago and has been aggressively raising its game across the region, with its parent company planting itself in countries such as the Philippines and Vietnam to help it secure revenues in what are expected to be fast-growing emerging casino markets.
Packer, who has stakes in casinos in Australia, London and Macau, wants to increase his company Crown Ltd’s 10% stake in Echo and win a board seat. Crown had put forward a resolution to remove Story at a July 20 shareholders meeting.
” The board of Echo has formed the view that the ongoing disruptive campaign concerning the resolution proposed to be put to an extraordinary general meeting of Echo for the removal of Story was damaging to the company, and that it was in the best interests of shareholders that Story not contest the resolution,” Echo said.
“Our shareholding in Echo is a material investment for Crown and we look forward to having discussions with Echo and exploring opportunities to work together,” Packer, Crown’s executive chairman, said in the statement.
Crown owns casinos in Melbourne and in Perth, and about a third of Melco Crown Entertainment, which has casinos in Macau. It wants Echo’s casino licences in Sydney and the Gold Coast because they are more likely to attract Asian high-rollers than Melbourne and Perth.