Genting Bhd, a leading Malaysian conglomerate, has set its sights on acquiring the remaining 50.64% of shares in its listed subsidiary, Genting Malaysia Bhd, for a total of MYR 6.74 billion (approximately $1.6 billion). This strategic move seeks to consolidate control over its casino and hospitality operations, strategically positioning the company for substantial investments in the United States market.
On Monday, Genting Group made a formal voluntary takeover offer, proposing to purchase all outstanding shares of Genting Malaysia that it does not currently hold. The offer includes a cash payment of MYR 2.35 ($0.56) per share, representing a 9.8% premium over the last traded price before trading was suspended. Funding for this acquisition will come from a combination of MYR 6.3 billion ($1.5 billion) in loans and the company’s existing cash reserves.
In its report to Bursa Malaysia, Genting emphasized that achieving full ownership of Genting Malaysia would enhance its financial flexibility. This is particularly crucial as Genting New York LLC, a branch of the company, prepares to embark on a $5.5 billion casino project in New York City. The company highlighted that complete ownership would enable a more efficient allocation of funds across its international operations, bolstering support for major projects worldwide.
However, Genting also cautioned about the potential implications of this transaction. Should public ownership fall below the mandated threshold, the company might be delisted from the stock exchange. Moreover, if Genting’s ownership surpasses 90%, a compulsory buyout could be initiated.
Market reactions were swift following the announcement, with Genting’s share price surging nearly 7% on Tuesday, marking the most significant increase in over three years. Despite this, analysts remain divided on the bid’s valuation and potential future impact.
According to The Edge Malaysia, Maybank Investment Bank argues that the offer undervalues Genting Malaysia, citing hidden assets such as valuable land in Miami and potential revenue from a casino license in New York. TA Securities echoed this sentiment, advising shareholders to reject the offer, expressing concerns that privatization might hinder future capital-raising opportunities.
Conversely, financial analysts from CGS International and Hong Leong Investment Bank recommended that investors accept the offer, viewing it as a favorable opportunity to exit amid current market conditions and a premium over targeted share prices.
Public Investment Bank chose not to take a definitive stance but did upgrade Genting Malaysia to a “buy” rating due to the potential for privatization, while maintaining a “neutral” rating for Genting Bhd.
Genting Malaysia, which operates Resorts World Genting in Pahang and holds casino operations in the United States, United Kingdom, the Bahamas, and Egypt, stands at a critical juncture. Should the Securities Commission Malaysia give its approval, the buyout could be finalized by the end of 2025, paving the way for a transformative period in Genting’s corporate trajectory.
As Genting Bhd moves forward with its ambitious acquisition plans, the company is keenly aware of both opportunities and challenges. The potential benefits of full ownership, particularly in realizing strategic investments in the lucrative U.S. market, are clear. Yet, the path is fraught with complexities, including regulatory hurdles and market volatility.
The debate among analysts and investors underscores the broader uncertainties within the global gambling industry. Rising competition, regulatory changes, and shifting consumer preferences are reshaping the landscape. Against this backdrop, Genting’s decision to pursue full control of its Malaysian subsidiary is a gamble on securing a competitive edge and unlocking long-term growth potential.
“For investors, this offer represents a crucial decision point,” mused an industry insider. While some stakeholders see the premium offer as an attractive exit, others perceive the intrinsic value and future prospects of Genting Malaysia as reasons to hold firm.
Ultimately, Genting Bhd’s bold move reflects a strategic shift towards greater autonomy and agility in navigating the challenges and opportunities of the global casino and hospitality sector. Whether this consolidation strategy will yield the intended results remains a subject of rigorous debate and close observation in the months and years ahead.
Garry Sputnim is a seasoned journalist and storyteller with over a decade of experience in the trenches of global news. With a keen eye for uncovering stories that resonate, Alex has reported from over 30 countries, bringing light to untold narratives and the human faces behind the headlines. Specializing in investigative journalism, Garry has a knack for technology and social justice issues, weaving compelling narratives that bridge tech and humanity. Outside the newsroom, Garry is an avid rock climber and podcast host, exploring stories of resilience and innovation.
