Genting takes stake in casino operator Echo

 

SINGAPORE GAMING operator Genting said it has taken a stake in Australian casino operator Echo Entertainment, just as Echo’s chairman unexpectedly resigned to avoid a damaging vote called by billionaire rival James Packer.

Analysts speculated that Genting was preparing for an acquisition, having built up a war chest of S$3.9 billion (€2.4 billion), and said Echo’s casinos were in cities where Genting had attempted to win licences in the past. A Genting spokeswoman declined to give the size of the stake but said the value of its investment is S$298 million (€186 million).

The Australian newspaper said earlier that Genting had built up a 4.9 per cent stake in Echo, which runs casinos in Sydney and the Gold Coast of Australia.

Echo said separately that its chairman, John Story, had resigned, bowing to a destabilising campaign run by Mr Packer who owns a rival casino operator and wanted to sack the chairman.

Shares of Echo jumped more than 4 per cent in morning trade. Mr Packer wants to boost his company Crown Ltd’s 10 per cent stake in Echo and win a board seat. Crown put forward a resolution to remove Mr Story at a July 20th shareholders meeting.

Echo said in a statement yesterday that Mr Story wanted the shareholders to vote on his position, but accepted the board’s view that he should resign ahead of the meeting.

Mr Packer, who has stakes in casinos in Australia, London and Macau, wants to use Echo’s Sydney licence to build a new hotel and casino complex in Sydney to attract more Asian high-rollers. A full takeover would cost more than A$3 billion (€2.4 billion) and Mr Packer would face tough regulatory scrutiny.

Genting, which has casinos in Singapore, Malaysia, the Philippines, England and the United States, knows Australia well, according to the Australian. It was a founding shareholder in the Burswood casino in Perth, which is now owned by Mr Packer’s company Crown.

Perpetual Investments, Echo’s second-largest shareholder after Crown, does not intend to support Crown’s push for a board seat, a senior executive told the Australian Financial Review. – (Reuters)