Genting To Buyout Stanley

Stanley Leisure Plc, the largest U.K. casino operator, will be bought by Genting Bhd., a Malaysian gaming company. The deal has been finalized for 483.6 million pounds ($901 million). The move comes shortly after the U.K. government relaxed its 37-year-old gambling laws to allow higher prizes and larger casinos.

Assigning logic to Genting’s plans, Kenny Yee, an OSK Research Sdn. analyst in Kuala Lumpur said, “Genting has been cooped up in Malaysia for too long, enjoying a monopoly status…With rising competition from Macau and Singapore, it has to diversify and the U.K. offers tremendous growth. Stanley has 44 casinos in the U.K. which will give Genting a strong presence.

Vincent Khoo, head of research at Hwang-DBS Vickers Research Sdn., echoed Kenny Yee’s opinion and said that buying Stanley “provides Genting the avenue to diversify from its Malaysian casino base and to participate in the anticipated brisk growth in the under-penetrated casino business in the U.K. as deregulation seeps in.''

Genting offered 860 pence a share in cash for the stake in Stanley it doesn't own. The price represents a 26 per cent premium to Stanley’s closing stock price on Friday, a day before the bid was announced.

The price for Stanley is being termed as fair. The implied price as a multiple of earnings is 25.8 times and 22.7 times on 2007 and 2008 consensus estimates. This reinforces the fact that the outlook for the company is positive and that brisk growth is anticipated.

The heat is on in the Asia's gambling market which is opening up to more international competition, with companies such as Wynn Resorts Ltd. and Las Vegas Sands Corp tapping markets. According to estimates, gaming acquisitions surged more than fourfold this year to $3.4 billion in Asia.