Echo takeover battle coming?

Malaysian casino operator ups its stake

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published October 9, 2012 2:20 pm AEDT

Malaysian casino operator, Genting, has lifted its stake in Echo Entertainment Group (ASX: EGP) back above 5%, but it's unknown if the company was behind several big trades in Echo over the past few days.

Genting picked up 1.9 million shares in Echo last Thursday, but stockbroker RBS had attempted to buy around 40 million shares, or 5% of Echo's stock, for a mystery buyer, after the market closed. Both Genting's Singapore and Hong Kong divisions have been active in Echo share trading, with the Hong Kong division stating last month that it intended to lift its stake in Echo above 10%, if permitted by regulators. The Singapore division recently sold off its whole shareholding in Echo.

Genting Hong Kong has applied to buy up to 25% of Echo, the same level that James Packer's Crown Limited (ASX: CWN) is seeking. What Genting's game is. no-one really knows. Speculation is rife that it could be a potential bidder for all of Echo, in competition with Crown. Genting could also be looking to partner with Crown to take control of Echo, and potentially split up Echo's assets. Some analysts have speculated that Genting is after a stake in Crown's Macau casino, and using its shareholding in Echo as a bargaining chip.

The jewel in the crown (sorry!) is Echo's Sydney casino licence. Crown is planning to build a six-star hotel and casino complex at Barangaroo, on Sydney's foreshore, but Echo holds the only casino licence in Sydney. The company also owns casinos in Brisbane and the Gold Coast.

James Packer is in the process of selling his 50% stake in Consolidated Media Holdings (ASX: CMJ), with the proceeds likely to be used to lift his stake in Crown and Crown's stake in Echo. News Corporation (ASX: NWS) has submitted a bid for Cons Media, but needs approval from Seven Group Holdings (ASX: SVW), which holds 25% of the company, to proceed.

Foolish takeaway

We'll know later this week if Genting has managed to acquire more shares in Echo, with ASX market rules requiring substantial shareholders to file notices at every 1% increase above 6%, up to the takeover threshold of 20%.

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Motley Fool writer/analyst Mike King doesn't own shares in any company mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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