Stanley Leisure, Genting to create U.K. super-casinos

Paul Jarvis

Wednesday, Nov. 24, 2004 | 9:42 a.m.

Stanley Leisure Plc, the largest U.K. casino operator, said it is joining forces with Malaysia's Genting Bhd. to develop Las Vegas-style casinos in Britain and capitalize on the relaxation of the country's gambling laws.

Genting, Asia's biggest publicly traded casino group, will control half of a joint company formed to build and run so-called regional casinos in the U.K., Stanley Leisure Chief Executive Bob Wiper said in an interview. The Malaysian company will buy 36 million pounds ($67 million) of Stanley's stock from Chairman Leonard Steinberg to raise its stake to 10 percent, he said.

The companies are joining forces to take advantage of U.K. government plans to relax Britain's 36-year-old gambling laws, allowing the construction of casinos with more slot machines and unlimited prizes. MGM Mirage of Nevada and Kerzner International Ltd. of the Bahamas also plan to build casinos in Britain.

"Genting want a piece of casino deregulation in the U.K., though I don't know why Stanley have chosen them," said Charles Wilson, an analyst at Bridgewell Securities in London with a "neutral" rating on Stanley stock. "If I were Stanley, I would much rather have the experience of a big Las Vegas operator."

Shares of Stanley Leisure rose 21 pence, or 5 percent, to 444 pence in London, boosting the company's market value to 562.8 million pounds. The stock has gained 18 percent in the past year as the Bloomberg Europe Entertainment Index has added 48 percent.

The joint-venture company will own all Stanley casinos that attain regional casino status, Wiper said. It will acquire an option to buy the site of a proposed 125 million-pound gambling development in Leeds, England, for 5.4 million pounds, he said.

"The combination of ourselves and one of the top five gaming companies in the world puts us in a very powerful position," Wiper said. The joint venture "will enable us to better capture the benefits of deregulation as they unfold."

The U.K. government last week said it will set an initial limit of eight regional casinos in its proposed reform of the country's gambling laws. It has yet to say how companies should apply to build and operate the casinos, which will be allowed to have as many as 1,250 slot machines paying unlimited prizes.

"We're in as good a position as one could be," Wiper said.

Genting, the owner of power, plantation and paper-packaging businesses in Malaysia, plans to raise $305 million in a rights offering to fund expansion in leisure, hospitality and gaming. Trading in the company's shares was suspended in Kuala Lumpur after the stock gained 5.6 percent to 18.8 ringgit ($4.95).

Genting, whose Highlands Resort Casino in Malaysia has more than 400 gaming tables and 3,000 slot machines, will raise its stake in Stanley Leisure to 10 percent from 2.8 percent. It today acquired eight million shares from Steinberg, who started the business in the 1950s, at a price of 450 pence a share.

The shares must be retained for a minimum of two years and Genting gave an assurance that it won't bid for Stanley Leisure for at least three years without a recommendation from the U.K. company's board or unless another offer is made for the business.

Bridgewell's Wilson said the share purchase reduces the chances of Stanley Leisure being taken over by another party.

Stanley, whose London casinos include the Crockfords and Palm Beach clubs, plans to acquire 50 percent of the city's Maxim casino from Genting for as much as 6.85 million pounds in stock. Genting agreed to acquire the casino, located in the Kensington district of London, from Gala Group Ltd. in September.

Stanley Leisure said earnings at its U.K. betting-shop unit declined in the six months ended Oct. 31 as European soccer results went against it. This was "largely offset" by profit from fixed-odds betting terminals, on which customers can play computerized versions of games such as roulette, it said.

The company's U.K. provincial casinos had a "satisfactory" first half after a "quiet" start to the year following changes to European money laundering laws, Wiper said.

The London casinos had a "good" first half, he said.