KUALA LUMPUR: It would appear that Tan Sri Quek Leng Chan has outfoxed fellow Malaysian billionaire Tan Sri Lim Kok Thay in the UK casino scene yet again.
Just two years after edging Lim’s Genting Group to be the single largest shareholder of Rank Group plc, Quek is now the UK’s top casino mogul — unseating Genting’s Lim. The £205 million (RM1.24 billion) acquisition of Gala Coral’s casinos by Rank last Saturday makes Quek the owner of UK’s biggest casino operator.
Including Gala Coral’s 23 casinos in the UK, plus three non-operating licences, Rank — which owns the Mecca Bingo clubs and Grosvenor Casinos — now has a total of 58 casinos and 13 non-operating licences in the UK. That’s ahead of Genting’s 46 casinos in the UK. Only four of Rank’s casinos are reportedly in London. Others include one at Bentley Mill Way in Walsall and another at Fiveways in Birmingham, according to the UK’s Associated Press.
“We see significant opportunities for Rank to invest in the new venues and convert these into the successful Grosvenor Casinos and ‘G Casino’ brand,” Michael Campbell, analyst with Daniel Stewart & Co plc wrote in a note dated yesterday.
In retrospect, Quek — whose corporate prowess is validated by landmark deals like his selling of Hong Kong’s Dao Heng Bank Ltd at over three times book to Singapore’s DBS Bank Ltd in 2001 — bought into Rank late 2007 after prices for the UK casino tumbled following a blanket smoking ban.
When Quek surfaced in Rank with a 4% stake in January 2008, Genting had accumulated a 10% stake. Yet, Quek — through Guoco Group — managed to raise his holding to 29.25% by mid-2010, while Genting’s holdings stayed relatively flat. Today, Guoco owns 74.5% of Rank.
It remains to be seen if Lim’s hand in the UK is strong enough to turn things around. As it is, Genting UK is building a £120 million casino in Birmingham with UK’s conference, exhibition and entertainment venue operator, the NEC Group.
Notably, though, Genting’s UK casinos have not generated as much excitement for investors as its ventures in the US or Asia, largely due to the difference in the scale of casinos typically available in the US or Asia versus most of Europe, including Britain. In Asia, a big casino houses more than 500 gambling tables and easily 1,500 slot machines — that’s 10 times the average of just 50 gaming tables and 150 slot machines typical of larger casinos in the UK.
Lim’s Genting Singapore plc has guided investors on the possibility of a major investment taking place over the next 12 months even as countries like Japan mulls the liberalisation of gaming laws to pump-prime its economy following the success of Singapore’s casino-resorts.
Back in Britain, Rank’s acquisition substantially broadens the latter’s reach, given that there’s little overlap with Gala Coral, the Financial Times reported yesterday. The acquisition “will be earnings enhancing in the first full year of ownership”, Rank’s chief executive Ian Burke reportedly said of the deal that’s expected to conclude in the third quarter and require clearance from the UK merger authorities.
It is not immediately certain whether Gala Coral intends to sell the other casinos and non-operating licences — including a non-operating licence in central London, as well as its Dundee and Gibraltar casinos — that were not part of the deal with Rank. Of the agreed price tag, some £22.5 million will be held in escrow through August 2015 or until Rank is satisfied with the resolution of a series of issues that botched negotiations earlier this year, the FT report read. Last Saturday’s deal came barely six weeks after a March 29 announcement of a breakdown in negotiations.
Interestingly, Daniel Stewart’s Campbell who is positive on Rank’s acquisition of Gala Casinos pointed out in his note that Guoco’s majority ownership of Rank “may still be viewed as a risk by some investors”. He did not elaborate. Whatever the case, for now, Quek has successfully made himself a UK casino mogul in little over four years.
No comments:
Post a Comment