Genting Acquisition Stokes Rumor of Rank Takeover
Malaysian casino group Genting Berhad has acquired a 9.38 percent stake in U.K.-based casino and bingo operator Rank Group, for which the latter half of 2007 has been a turbulent period.
Rank in October issued a profit warning advising that its full-year operating profits would be "significantly lower than in 2006" -- when it achieved profits of £77.4 million -- due primarily to new U.K. laws covering smoking and gaming terminals.
Just last Monday, Rank rejected an all-share buyout offer from Harrah's Entertainment; by Thursday, however, rumor surfaced of a renewed all-cash offer from the U.S. casino giant.
Analysts believe that Genting could use its newly-acquired holding to pursue a takeover of Rank, but media reports suggest the acquisition may spark a bidding war among some of the top bookmakers, such as Ladbrokes and William Hill.
Genting bought casino group Stanley Leisure in September 2006 for £639 million, making it the largest casino operator in the United Kingdom, with 47 venues. A full takeover of Rank would give it control of about 80 of the United Kingdom's 140 casinos.
Rank's stock rose 8.75p, or 8.71 percent, on the announcement. It is expected to release a trading statement for the 49 weeks to Dec. 9, 2007 on Dec. 12.
Affable Acquisition?
Following news of Genting's newly acquired holding in Rank, the Financial Times reported that sources close to the deal said that Genting's intentions are "entirely friendly." The source, whom the paper did not name, said that contact with Rank was made initially by the Malaysian group. "The intention was to be friendly," the source said. Meanwhile, Rank "insiders" have opined to the paper that Genting "is more interested in a strategic position in Rank rather than building a platform for a possible approach."
Spend on Genting
In a research note published Tuesday, Affin Investment Bank Research said it maintained its buy ranking on Genting at CNY 7.90 ($1.06), keeping its target price of CNY 10.40, which implies a FY 2008 price-over-earnings of 24.2 times. Affin, like the British media, has predicted Genting's 10 percent holding in Rank could trigger a bidding war among Harrah's, Ladbrokes, William Hill and Singapore-based BIL. The note added that Genting may have spent £39 million on 10 percent of Rank's current market cap of £392.5 million.
Too Little Too Late
Tuesday morning's Guardian took a less rosy view of the Genting acquisition, having said that the excitement "comes too late for those who have kept faith with Rank over the years." The paper called the London-listed operator a "shrunken business," and suggested that Rank brass are "perceived to have their backs against the wall: a reasonable offer would be hard to resist, says the market."
Seeking Deeper Pastures
Aussie sports betting group Marginbet said it will move away from online gambling to concentrate its efforts in the mining sector, and has announced the sale of its Portlandbet business. In a note to the Australian Stock Exchange, the company announced it had decided on the move following a report that it had commissioned. "On the basis of the findings of the report, the board as resolved to focus its activities solely within the mining sector," the company said. Portlandbet listed on the ASX in September after raising A$2 million to fund its expansion. Trading in its shares was suspended on Nov. 21.
Splitting the Empire
This week, shares in Crown Ltd., the gambling business of PBL's James Packer, made their debut on the Australian Stock Exchange. According to the AP, PBL shareholders last month endorsed Packer's plan to split his company's gambling and media businesses into two separately listed companies -- Consolidated Media Holdings Ltd. and Crown -- and return about A$2 billion to shareholders. Shareholders, the report said, will receive up to A$3.00 per PBL share, which last traded at A$20.80, plus a share in CMH and Crown. CMH shares will begin normal trading on Dec. 17. Packer will be Crown's executive chairman and CMH's deputy chairman.
Thanks, Volatile Equity
London-listed spread betting specialist IG Group said Wednesday that first-half revenue rose by more than half as volatile equity markets prompted record levels of transactions and new accounts. Sales were up to an estimated £85 million in the six months to Nov. 30 from £57 million during the previous year period. "Growth has been driven by both continued and underlying growth as well as by favorable market conditions [and] high market volatility," Simone Glass, an analyst at UBS AG, told Bloomberg. In mid-afternoon trading, shares in the company were up 1p, or 0.26 percent, to 386.00.
Interims from Probability
Mobile gambling group Probability has released interim results highlighting an 83 percent jump in net gaming revenue to £1.17 million, offset, however, by an £624,000 operating loss. Probability Chief Executive Charles Cohen said the results "demonstrate the core strengths" of the company's business model. "Even before factoring in deals such as Blue Square, the Sun and Orange, we are confident of delivering growth in line with expectations for the full year and beyond," Cohen added. In mid-afternoon trading, Probability shares were down 0.50p, or 1.23 percent, to 40.00.
Rosy Update from GVC
Germany-facing operator Gaming VC said Thursday that trading was slightly ahead of management's expectations for the full year, bolstered by additional revenue from its Italy-facing sports book, Betaland.com. Gross win for the three months to November's end totaled 39.1 million euros, up 5 percent against figures from the previous-year period. "Securing our Maltese license and moving our core business there positions Gaming VC well to reduce legislative risk to its operations in Germany and to provide an additional platform to expand our business," said Gaming VC Chief Executive Kenny Alexander. Like German operator Fluxx AG the company has repeatedly stressed its desire to diversify ahead of the government's adoption of the proposed Interstate Lotteries Treaty in January 2008.
Negotiations Ongoing, Shares Falling
Inspired Gaming said Thursday that it is still in negotiations with Iceland-based investment company FL Group over the possibility of a takeover. In September, Inspired said it had received a £270 million takeover approach from FL, which already holds a 10 percent stake in the London-listed company. On the announcement, shares in Inspired, which floated in June 2006, were down 57.50p, or 17.04 percent, to 280p.
ISWI News
Interactive Systems Worldwide Inc. said wagering via its SportXction product -- operated in the United Kingdom by ISWI subsidiary Global Interactive Gambling Ltd. -- has topped $3 million for the second consecutive month. ISWI, listed on the Over the Counter bulletin board, said it was "very encouraged by this sustained increase in wagering volume." It added that it was in discussions regarding new bookmaking partnerships with several domestic and foreign companies in the gaming industry.
Big Numbers for Macau
According to the South China Morning Post, gambling revenues for Macau in October jumped 56 percent from a year earlier, crossing the $1 billion mark for the first time month-on-month. Casinos in the Special Administrative Region took $1.15 billion, besting May's record by 23 percent.
Less than Inspirational Performance
Following Thursday's news regarding Inspired Gaming's potential tie-up with FL Group, shares in London-listed Inspired shed a further 17p, or 6.07 percent, to 263.00. Inspired said it "remains in discussions with FL Group concerning a possible offer," adding that "in the current market conditions, there can be no certainty that any offer will be forthcoming."
Luck of the Irish?
Wednesday's Irish Independent profiled spread betting group WorldSpreads and said that its shares -- available on the Alternative Investment Market of the LSE since Aug. 1 -- are trading at an 80 percent premium to the flotation price, "marking it out as one of the top performing Irish shares in 2007." In late November, WorldSpreads reported a fivefold increase in profits to 1.3 million euros for the six months ended Sept. 30, 2007. "From a pure trading perspective, there is no better 'cost or tax-effective' way to trade the markets than financial spread betting and Irish investors have not been slow to pick up on this," WorldSpreads Chief Executive Conor Foley told the paper.