10 October 2010

Rank: Guoco vs Genting

Recently, a mid-size brokerage firm in London states the possible corporate tussle in UK gaming company - Rank. What's interesting in UK in fact is the two Malaysian tycoons, Tan Sri Quek Leng Chan and Tan Sri Lim Kok Thay. Rumour is brewing on the possible corporate tussle between the two to gain bigger control of the company.

As at June 30, 2010, Quek's Guoco Group Ltd and Lim's Genting Bhd owned 29.95% and 11.59% respectively. Speculation that Guoco may raise its stake in Rank to a more significant level has been around for some time. This seems more likely now because Rank has improved its operating performance, and it fits into Quek's style of owning at least a 60% stake in each of his core listed companies.

Genting is said to be monitoring the situation very closely, as Genting has just perform its multi-billion related party transaction (Genting Singapore sold its UK gaming operations to Genting Malaysia).

In my view, any actions taken would be coming from Guoco, not Genting side. Reasons being Quek has been actively on the look out for acquisitions. Guoco's cash holding has been decreasing, after launching a few acquisitions since 2008 crisis. Yet, Guoco is cash rich now.

Meanwhile, Genting Malaysia has utilized most of its cash after taking UK's gaming operations and US racino project. Although Genting Malaysia could raise cash easily, this could potentially falling out-of-favor from investors as a cash rich dividend stock.

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