Starwood, Kerzner hike Wembley bid

Toby Anderson

Tuesday, April 20, 2004 | 11:11 a.m.

Starwood Capital Group LLC and casino operator Kerzner International Ltd. today raised their joint offer for Wembley Plc to 309 million pounds ($555 million), topping an MGM MIRAGE bid, as U.K. government plans to relax gambling laws prompt competition for venues.

BLB Investors LLC, a company formed by financier Barry Sternlicht's Starwood, Kerzner and Waterford Group LLC, offered 860 pence a share for Wembley, spokesman Andrew Honnor said in an interview. Las Vegas-based MGM MIRAGE earlier this month boosted its offer to 840 pence for each Wembley share from a January bid of 750 pence.

Wembley's dog tracks in London, Birmingham and Manchester and in Rhode Island are at the center of a three-month takeover battle as U.K. lawmakers propose allowing gambling venues to add more slot machines and abolishing rules that patrons must be members to wager. The changes may boost Britain's annual gambling revenue to $2.3 billion, Lehman Brothers Inc. analysts estimate.

"It's a good way to get into the U.K.," said Jeremy Harris-St. John, who helps manage $1.3 billion as head of Eden Group Plc's private-client business. "Everyone's got huge expectations the government is going to open up the industry."

The group led by Starwood Capital, a closely held real estate investor based in Greenwich, Conn., said it controls 22.2 percent of London-based Wembley, whose board is backing the latest bid. In a Regulatory News Service statement, MGM MIRAGE said it's "considering its options."

"It's a now a question of waiting to see whether MGM raises its offer," said Tim Rees, who helps manage about $3 billion at Insight Investment Management in London.

Starwood Capital is headed by Sternlicht, 43, founder of Starwood Hotels & Resorts Worldwide Inc., the owner of the Sheraton and Westin chains and a partner in a group bidding to buy the bankrupt Aladdin resort on the Las Vegas Strip. Kerzner, based in Paradise Island, the Bahamas, owns the Atlantis Resort there and also operates resorts in Mexico and Mauritius. It developed the Mohegan Sun casino in Connecticut with Waterford.

British lawmakers made proposals this month to further deregulate the country's gambling industry. The Joint Committee on the Draft Gambling Bill made recommendations to overhaul 35-year-old legislation by, for instance, allowing all casinos to offer bingo and betting and by permitting operators to install larger numbers of gaming machines.