By Gavin Lower
MELBOURNE--Malaysia's Genting Bhd. (3182.KU) has asked
Australian regulators for permission to increase its stake in Echo
Entertainment Group Ltd. (EGP.AU) above 10%, a person familiar with
the matter said Tuesday.
The move has stoked speculation that a bidding war could erupt
over the owner of four casinos including The Star in Sydney and
Jupiters on the Gold Coast, with a market capitalization of close
to 3 billion Australian dollars (US$3 billion).
Crown Ltd. (CWN.AU), controlled by Australian billionaire James
Packer, which operates casinos including Crown in Melbourne and
Burswood in Perth, is also seeking approval to increase its own 10%
interest in Echo.
One of Genting's units Genting Hong Kong Ltd. (0678.HK) has
applied to casino regulators in New South Wales and Queensland
states to increase its stake above the 10% individual shareholder
cap built into Echo's constitution, the person said. Last week,
Genting's Singapore unit announced the company had bought stakes
totalling 9.9% of Echo for about A$295.1 million.
Spokespeople for the New South Wales' Independent Liquor &
Gaming Authority and Queensland's Liquor & Gaming Commission
declined to comment on the application Tuesday. At 0553 GMT, shares
in Echo were flat at A$4.19, outperforming the S&P/ASX 200
index, which was down 0.5%.
Echo has long been viewed as a takeover target since it was spun
out of wagering group Tabcorp Holdings Ltd. (TAH.AU) last year. It
holds an exclusive license to operate in New South Wales state, the
home of The Star casino, until 2019, which would be attractive to
Mr. Packer who wants to operate a new casino in Sydney.
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.
Buying Echo would help Genting build a regional footprint with
access to gateway city Sydney, which hasn't effectively penetrated
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.
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
