Casino investor Melco International Development Ltd – a company controlled by Lawrence Ho Yau Lung (pictured) – is considering taking private Nasdaq-listed Entertainment Gaming Asia Inc.
The announcement was made in a Tuesday filing by Entertainment Gaming Asia.
Melco International “is reviewing potential strategic alternatives” with respect to Entertainment Gaming Asia and is “considering making an offer… to acquire all of the outstanding common stock” of the company that it does not already own, the document stated.
The filing said Melco International was considering pitching a bid to stockholders “in the range of approximately US$2.10 to US$2.25 per share, in cash via a tender offer”. It added “any such transaction would be financed using available cash on hand”.
The shares of Entertainment Gaming Asia ended Tuesday’s regular trading session in New York valued at US$1.65 apiece, up 2.5 percent from the previous day.
Melco International holds approximately 64.8 percent of Entertainment Gaming Asia. Melco International is also the controlling shareholder of Asian casino developer Melco Resorts and Entertainment Ltd, which has interests in Macau and the Philippines.
Monday’s Entertainment Gaming Asia filing added: “Melco International notes that no determination to make an offer has been made and Melco International may not make any such offer.”
The document said Melco International planned to “have further discussions and other communications” on the matter with Entertainment Gaming Asia and its management, among other potential parties.
Entertainment Gaming Asia’s business activities include leasing electronic gaming machines in Asia’s gaming sector. The firm has been restructuring its business. It sold last year its assets related to gaming product manufacturing as well as its gaming assets in Cambodia, and now has operations only in the Philippines.
The company reported consolidated revenue from continuing operations of US$357,000 for the fourth quarter of 2016, down 47.2 percent from the prior-year period.
Melco International reported in March a net profit of HKD10.37 billion (US$1.33 billion) for full-year 2016. That compared to a net profit of HKD100.9 million in the prior-year period, the company said in a filing to the Hong Kong Stock Exchange.
Melco International became the single largest shareholder in Melco Resorts – then known as Melco Crown Entertainment Ltd – in May last year. That was after Crown Resorts Ltd – its Australian partner in the Asian casino operator – decided to reduce its stake. In February 2017, Melco International completed the purchase of an additional interest in Melco Resorts from Crown Resorts, increasing Melco International’s ownership to 51.3 percent.
Melco International announced in 2016 a strategic cooperation arrangement – via a subsidiary – to provide consultancy services for a casino project on Jeju Island, South Korea. The company is also part of a consortium that has entered the final stage of a process to obtain a 30-year licence for the operation of a new casino resort in Cyprus.
Mr Ho also controls Summit Ascent Holdings Ltd, a company which is the lead developer and operator of the Tigre de Cristal casino resort in the Russian Far East.
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"The demographics of Tokyo, Yokohama, and Osaka (possible Japanese urban gaming resort locations) warrant larger gaming floors [than 15,000 square metres]"
Analyst at investment research firm Morningstar