Malaysia's Genting Seeks Approval to Buy Up To 25% of Australia's Echo

05 Oct 2012

-- Genting Bhd.'s Hong Kong unit seeks approval to raise its stake in Echo to up to 25%, from 4.24% now -- Genting Hong Kong previously applied to buy more than 10% of Echo (Recasts throughout, adds details and background.) Malaysian gambling group Genting Bhd.'s (3182.KU) Hong Kong unit is seeking regulatory approval to buy up to 25% of Australia's Echo Entertainment Group Ltd. (EGP.AU), stoking speculation of a potential battle with Australian billionaire James Packer for control for Sydney's only casino operator. Genting Hong Kong Ltd. (S21.SG), a cruise-ship operator that partly owns a Manila casino, has asked the New South Wales government's Independent Liquor and Gaming Authority for permission to raise its Echo stake from the current 4.24%, the Australian regulator said Friday in a statement. The regulator said it would consider the application together with its counterpart in Queensland state, where Echo also has gambling operations. The move marks a change from Genting Hong Kong's previous application for approval to buy more than 10% of Echo and matches a rival application from Mr. Packer. Echo's constitution limits the maximum stake an individual shareholder may hold to 10%, and this cap can only be lifted upon approval from New South Wales and Queensland state regulators. According to people familiar with Genting Hong Kong's thinking, the company is currently interested in raising its Echo stake up to the current 10% cap, even as it awaits approval to buy a larger share. Mr. Packer's Crown Ltd. (CWN.AU), which operates casinos including Crown in Melbourne and Burswood in Perth, currently owns 10% of Echo and has been seeking regulatory permission to buy up to 25% of the company. Echo, which runs The Star casino in Sydney, has been seen 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 Australia's New South Wales state, home of the Star casino, until 2019, which would be attractive to Mr. Packer, who wants to operate a new casino in Sydney. Genting Bhd., controlled by gambling mogul Lim Kok Thay, revealed its interest in Echo earlier this year, when its Hong Kong and Singapore units started buying stakes in the Australian firm. Those purchases spurred speculation that Genting was plotting a takeover of Echo or planning to block a similar bid by Mr. Packer. Although Genting Singapore PLC (G13.SG) last month sold off its 4.8% stake in Echo in a surprise move, Genting Hong Kong had said then it planned to keep its investment in Echo. Genting Bhd. hadn't disclosed its intentions in acquiring its Echo stake, but analysts said buying Echo would help the group build a regional footprint and would plant the Genting flag in a country that is already a hot destination for Asian tourists, who make up the casino company's core customers. Echo's casinos--the other two are in Brisbane and Townsville--are located in Australian cities where Genting has attempted to win licenses previously.