Proposed Merger to Create Casino Super-group
Stanley Leisure, the UK’s largest casino operator, has opened merger talks with London Clubs International that could lead to the creation of a gaming industry heavyweight worth nearly £700m.
The deal is being orchestrated by Genting, the Malaysian conglomerate, which is a major shareholder in both companies. The talks began within the past two weeks.
Stanley Leisure is being advised by JP Morgan Cazenove, while London Clubs International (LCI) has appointed Rothschild.
Sources close to the discussions insisted the negotiations were at an early stage. But it is understood that Bob Wiper, Stanley’s chief executive, would emerge at the helm of any enlarged organisation.
At Friday’s close Stanley Leisure was worth £445m while LCI was worth £240m. Genting is Stanley’s second-biggest shareholder, with a stake of almost 12 per cent. The Malaysian conglomerate owns almost 30 per cent of LCI. Genting would control around 20 per cent of an enlarged group, based on current valuations.
Market sources have suggested that any deal will be paper-based and unlikely to place a large premium on LCI.
The discussions follow months of speculation suggesting the two groups would get together, which was sparked by Genting buying stakes in the two groups in spring last year. Analysts believe shares in both companies are already sustained by a bid premium.
Shareholders have also been calling for consolidation in the industry, in light of the threat posed by the international casino operators poised to enter the UK as a result of the Government’s proposed new supercasinos. The combined group would run more than 50 casinos across the country.
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Stanley announced last week that it had bought the Harbour House Casino in Southampton for £5.9m. The company has concentrated on its casino operations since selling its betting shops to William Hill last year in a £327m deal. Stanley’s pre-tax profits slipped to £22.2m last year, from £24.5m in 2004.
LCI sold its Les Ambassadeurs casino in Mayfair earlier this year for £115m to help repay its bank debt. The group completed a £49m fund-raising last year as part of a renegotiation of its debts.
