Genting Singapore took stakes in Echo Entertainment, Australia’s only Sydney casino company recently. The scenario has turned into a bidding war now among two giants, billionaire James Packer and casino empire Genting Singapore.
The entire event is the consequence of a series of happenings over the weeks where the board and shareholders of Echo witnessed lot of turbulence and difference of opinion.
There has been lot of debate regarding the governance of the Echo and ousting of its chairman Mr. John Story. This was the result of a personal and public destabilising campaign conducted by Mr. Packer in an attempt to sack Mr. Story from the post of chairman. Mr. Story did not resign willingly and succumbed to the views of Echo directors, especially the executive members Larry Mullin and Matt Bekier, urging that he should go.
The position of acting chairman of Echo has now been taken by John O Neill, chief executive of the Australian Rugby Union. It has been discussed that Mr. Packer would be happy with this new change as there are good ties between Mr. Neill and the former federal minister for sports Mr. Mark Arbib who is also Mr. Packer’s new staff member. James Packer was trying to pass on the hot seat to Mr. Jeff Kennett, former Victorian premier. But with fierce resistance from the board of Echo, he has decided to back off from this decision. Perpetual, the second largest shareholder of Echo, has asserted that even if Mr. Story has resigned, they will not change their view regarding resistance to a Crown representative on the board of Echo.
Crown Ltd. is in fact owned by James Packer and the company had urged that Echo was performing below the mark under the leadership of Story. The entire scenario got a twist of events when the casino giant Genting Singapore stepped in. The Genting Group is led by Mr. Lim Kok Thay. This group owns Genting Highland Casino Complex in Malaysia. It also owns the Resorts World at Sentosa worth Singapore dollars of 6.6 billion. Besides this, it also has stakes in Resorts World in Manila as well as 48 boutique casinos in the UK.
Mr. Packer has plans to construct a six-star hotel and casino development in the Barangaroo Precinct in Sydney. He is attempting to tap into the money-spinning market of the tourism industry in the area and wants to attract Asian high rollers in Melbourne and Perth.
But with the emergence of Mr.Lim’s Genting Group, Packer can no longer succeed in taking control of Echo by stealth. Speculations are in the air that both Packer and Mr.Lim might seal a deal. There are also opinions that this may be the beginning of a bidding war, in which the Genting Group can pay as high a rate as $6 to $ 6.5 per share. In the financial and strategic sense, Genting will possibly takeover Echo. The prevailing interest is due to the cause that earlier Genting has tried to secure gaming licences in the Gold Coast and Sydney. As Echo has casinos in the provinces, whether it is taken over soon or a prolonged bidding war will continue remains to be seen.