Even though Genting Bhd has moved closer to the 75.0 percent share-ownership threshold that might permit it to take private its casino-operator unit Genting Malaysia Bhd, the situation “remains complex,” suggested a Thursday note from banking group Nomura.
“Under Malaysian regulations, reaching 75 percent would allow Genting [Bhd] to convene a shareholder meeting and make a reasonable exit offer to remaining holders,” wrote analysts Tushar Mohata and Alpa Aggarwal. They were referring to the potential move by the parent to take Genting Malaysia off Bursa Malaysia.
“However, the delisting can be defeated if more than 10 percent of [Genting Malaysia] shareholders object, and an independent advisor would evaluate the exit offer,” added the analysts.
Their memo made reference to one among a series of filings by Genting Malaysia on Thursday, that indicated the Genting parent had increased its stake in Genting Malaysia – via open-market purchases – to just under 73.80 percent, from the 73.13 percent achieved at the time the parent’s takeover offer closed on December 1.
Nomura further noted: “We have not been able to confirm with [Genting Bhd] management on whether they will continue buying more, and if yes, do they intend to submit a delisting application as soon as the holding reaches 75 percent.”
According to Malaysian listing rules, Genting Bhd is now restricted from purchasing additional voting shares in Genting Malaysia – above a 2 percent threshold – or announcing further takeover offers for Genting Malaysia over the next 12 months.
But via on-market purchases of under 2 percent, the parent can still control more than a 75.0-percent stake in Genting Malaysia.
An independent advisor to Genting Malaysia had said that the MYR2.35 (US$0.56) per-share price that had been made by the parent – under an offer process that began in mid-October – was “not fair and not reasonable”. It had recommended existing shareholders “reject” the offer.
Nomura’s Thursday note also mentioned that – although Genting Malaysia’s unit, Genting New York LLC, had been recommended for a downstate New York casino licence in the United States – the Genting Malaysia stock price had declined after Monday’s news.
The institution said some of the fall could have been “technical selling pressure” by investors that had expected “post-licence announcement upside”.
But Nomura also observed another reason could have been that the New York state recommendation body did “not agree with the request to lower Genting Malaysia’s originally-proposed and industry-leading tax rates (56 percent slots/30 percent tables versus competitors’ 25 percent/10 percent), which might have come as a negative surprise to investors”.
