-- Genting applies to increase stake in Australia's Echo
Entertainment
-- Application to lift stake above 10% limit
-- Genting currently holds 9.9% of Echo Entertainment
-- Latest development sparks speculation about possible bidding
war for Echo between Genting and billionaire James Packer
(Recasts 1st paragraph, adds background throughout.)
By Gavin Lower
MELBOURNE--Speculation that a bidding war could erupt over Echo
Entertainment Group Ltd. (EGP.AU), which holds an exclusive license
to operate casinos in New South Wales state until 2019, is growing
as Malaysia's Genting Bhd. (3182.KU) and billionaire James Packer
are now both looking to increase their holdings in the company.
Echo, which owns of four casinos, including The Star in Sydney
and Jupiters on the Gold Coast, and has a market capitalization of
close to 3 billion Australian dollars (US$3 billion), has been seen
as a takeover target since it was spun out of wagering group
Tabcorp Holdings Ltd. (TAH.AU) last year.
Buying Echo would help Genting build a regional footprint with
access to Sydney, which hasn't effectively tapped the Asian VIP
gaming market. Echo's casinos--the other two are in Brisbane and
Townsville--are located in Australian cities where Genting has
attempted to win licenses previously.
Meanwhile, Echo would be attractive to Mr. Packer as he wants to
operate a new casino in Sydney.
The latest development came when New South Wales state's
Independent Liquor & Gaming Authority and Queensland state's
Office of Liquor & Gaming Regulation said in separate
statements Tuesday that Genting had applied to increase its stake
in Echo to more than 10%.
Echo's constitution says a shareholder can't hold more than 10%
of the company without approval from regulators in the two
states.
As of June 19, Genting's Singapore and Hong Kong units had taken
a combined 9.9% stake in Echo, according to a regulatory filing by
Genting Singapore.
James Packer's Crown Ltd. (CWN.AU), which operates casinos
including Crown in Melbourne and Burswood in Perth, is also seeking
approval to increase its own 10% interest in Echo.
A spokesman for Echo Entertainment declined to comment on
Genting's move.
A spokesman for Crown couldn't be reached for comment and a
spokeswoman for Genting declined to comment.
Echo Entertainment's shares closed Tuesday down 0.2% at A$4.18
while the benchmark S&P/ASX 200 was 0.4% lower.
Genting has plenty of chips to play after another of its
subsidiaries raised over US$1.8 billion this year. Genting
Singapore announced a bond issue in April worth up to 700 million
Singaporean dollars (US$546 million) after raising S$1.8 billion in
February. Both fund raisings happened despite the company having a
healthy balance sheet.
Speculation that a move on Echo by Mr. Packer could be imminent
intensified last week when he endorsed a bid by News Corp. (NWS.AU)
for Consolidated Media Holdings Ltd. (CMH.AU). Mr. Packer is the
cable television company's largest shareholder and successful
completion of that deal would give him around A$1 billion to play
with. News Corp. owns Dow Jones Newswires and The Wall Street
Journal.
Write to Gavin Lower at gavin.lower@wsj.com
