Casino giant to buy London Clubs

(source: BBC News August 31, 2006)

Casino giant to buy London Clubs
The world’s largest gaming firm, Las Vegas-based Harrah’s Entertainment, has agreed to buy UK casino operator London Clubs International for £279m ($530m).
Harrah’s said buying London Clubs was a “highly attractive” way for it to establish its presence in the UK.

Harrah’s owns or manages 37 casinos in the US, under the Harrah’s, Caesars and Horseshoe brand names.

London Clubs operates four casinos in the capital and also runs sites at Southend and Brighton.

In addition to its UK sites, London Clubs also operates two casinos in Egypt and one in South Africa.

It has also recently secured five new UK casino licences for sites in Manchester, Leeds, Blackpool, Nottingham and Glasgow.

“London Clubs International has one of the leading positions in the UK casino market and, through the new licences that it has recently been awarded, will be able to further enhance its position,” said Harrah’s chief executive Gary Loveman.

Casino shake-up

The UK gaming sector has come under the spotlight following the 1995 Gambling Act.

The Act allows for three types of casino – the super-casino, large casino and small casino – defined by the size of the customer area allowed, the number of slot machines and size of the jackpots.

Originally, the government said there would be up to 40 super-casinos but this number was cut – firstly to eight, and then to just one – following heavy opposition.

“London Clubs is an important strategic asset for foreign gaming companies wanting to establish a footprint in the UK ahead of deregulation,” said Matthew Gerard of Investec Securities.

In June this year, London Clubs announced that it was talks about a possible merger with Stanley Leisure, which is the largest casino operator in the UK with 45 sites.

But following the announcement, Harrah’s Entertainment approached London Clubs about a takeover bid, and the two have now agreed a 125-pence-per-share deal.

News of the deal sent shares in London Clubs soaring, and they closed up 34% on Thursday.

Malaysian gaming conglomerate Genting, which owns nearly 30% of London Clubs, said it was reviewing its options.

“It is difficult to believe Harrah’s would have approached the LCI board without – at least unofficially – consulting Genting,” Mr Gerard said.

Date Posted: 31-Aug-2006