Malaysian gaming giant Genting Berhad has launched a conditional voluntary takeover offer to acquire the remaining 50.64% of its subsidiary, Genting Malaysia, that it doesn’t already own.
Genting Malaysia is the entity that controls the group’s Malaysia flagship Resorts World Genting, plus Resorts World New York City – currently a leading contender to win a full casino license in New York – as well as Empire Resorts.
In a filing, Genting Bhd, which currently holds a 49.36% stake in Genting Malaysia – said the takeover offer was for all remaining 2,870,039,874 ordinary shares in Genting Malaysia at a cash offer price of MYR2.35 per share. If it was to acquire all shares, this would value the transaction at MYR6.74 billion (US$1.59 billion).
According to information filed with the Malaysia Bourse on Monday, Genting Bhd is “desirous” of delisting Genting Malaysia either by gaining statutory control, effective at 75% ownership, or compulsory acquisition should ownership reach 94.94%.
In its filing, Genting Bhd pointed to the group’s ongoing New York license bid as a key reason for making such a move.
“The bid involves a proposal by [Genting Malaysia subsidiary] Genting New York to develop a world-class integrated resort destination, with an estimated US$5.5 billion project cost,” it explained. “Genting New York is one of the four remaining contenders for up to three downstate New York gaming licenses.
“If the bid is successful, significant capital investment is required to implement the abovementioned proposal. In this regard, Genting Bhd believes that with control over Genting Malaysia clearly established through its majority ownership of Genting Malaysia shares, the overall financial profile of Genting Malaysia will be further enhanced as Genting Bhd will be better placed to lend the Genting Group’s financial strength and network to support the development of this significant project.”
The group added that its offer price represented a premium to shareholders of between 9.81% and 22.90% above the market prices of Genting Malaysia shares over the last 12 months.
Nomura analysts responded to the news by upgrading Genting Malaysia to “Buy”, explaining, “We think that the potential benefits of the takeover offer and improved prospects for New York casino license win are more immediately captured at the Genting Malaysia level. For Genting Bhd, the higher gearing ratio and finance costs are likely to offset these positives.
“We keep our earnings estimates for Genting Bhd unchanged, pending clarity on the acceptance level of the offer.”
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