LONDON -(Dow Jones)- Stanley Leisure PLC's (LSE:SLY) (SLY.LN) strong share price run continued Tuesday as the U.K. casino group's biggest shareholder, Malaysia's Genting Berhad, emerged as the party behind the mysterious takeover approach.
Genting, which holds a 20% stake in Stanley Leisure (LSE:SLY) , made the approach after Harrah's Entertainment Inc.'s (NYSE:HET) (HET) GBP279.3 million recommended bid for London Clubs International PLC (LSE:LCI) (LCI.LN) last Thursday, a person familiar with the situation told Dow Jones Newswires.
Stanley Leisure (LSE:SLY) and London Clubs, which also counts Genting as its cornerstone shareholder with a 29.9% stake, were in early merger talks before the deal was blown out of the water by Harrah's.
Stanley Leisure (LSE:SLY) declined to identify the party involved or when the approach was received. The company's adviser JPMorgan Cazenove weren't available for comment.
Genting also wasn't immediately available for comment.
Stanley Leisure (LSE:SLY) shares, which rallied 19% Monday after the group confirmed that it has received a takeover approach, were up 28.50 pence, or 3.5%, at 839.50 pence at 1511 GMT Tuesday. Earlier in the session, the stock hit a near seven month high of 843.50 pence. The broader U.K. market is down 0.3% at 5970.40 points.
Stanley Leisure (LSE:SLY) is the largest casino operator in the U.K. with 45 casinos trading throughout Great Britain, 41 in the provinces and four in London, including Crockfords, according to its website.
The company, which was founded by Leonard Steinberg in 1958, sold its betting division to William Hill PLC (WHM.LN) last year in June.
Most U.K. gaming analysts believe Genting is behind the approach, and note it already has a major holding in the company.
"We think Genting's move might be towards consolidating its relationship with Stanley Leisure (LSE:SLY) , perhaps preempting any attempts by other parties," UBS said, noting interest in U.K. casinos has picked-up ahead of the industry's deregulation.
The list of who will win the 17 new casino license under the 2005 Gambling Act is scheduled to be published in December, with full confirmation of who gets what including the major prize - one regional casino - by April 2007, according to Altium Securities.
If Genting is the bidder, it "will be maximizing the price it pays given the current price", Citigroup said.
Genting, which initially took a 22% stake in Stanley Leisure (LSE:SLY) in November 2004 at around 400 pence a share, still has a further 12 months or so of its three- year standstill agreement to run. It would either need consent from the directors, or it would have to make a hostile bid, Citigroup said in a note to clients.
As well as Genting, there's also the chance that Harrah's, Las Vegas Sands Corp. (NYSE:LVS) (LVS), MGM Mirage (NYSE:MGM) (MGM), Kerzner International Ltd. (NYSE:KZL) (KZL), Sun International Ltd. (Johannesburg:SUI) (SUI.JO), Aspers and Tabcorp Holdings Ltd. (Australia:TAH) (TAH.AU) may be behind the approach, Citigroup said.
U.K. bookmakers Ladbrokes PLC (LSE:LAD) (LAD.LN) and William Hill PLC (LSE:WMH) (WMH.LN) are unlikely to bid for different reasons, the broker added.
Company Web site: http://www.stanelyleisure.com
http://www.rank.com
http://www.lciclubs.com
http://www.harrahs.com
-By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290; lilly.vitorovich@dowjones.com
(END) Dow Jones Newswires 09-05-06 1137 Copyright (c) 2006 Dow Jones & Company, Inc.
