* Genting speculated to be preparing for acquisition
* Packer wants to boost influence over rival Echo
* Echo board bows to pressure, chairman resigns
* Echo shares jump as much as 4 pct vs market’s 1.2 pct fall (Corrects June 8 story, removing reference in paragraphs 1 and 5 to possible stake value)
By Victoria Thieberger and Kevin Lim
MELBOURNE/SINGAPORE, June 8 (Reuters) - Singapore gaming operator Genting said on Friday it had taken a stake in Echo Entertainment, raising the prospect of a battle for control over the $3 billion Australian casino company with billionaire rival James Packer.
Packer, who wants to use Echo’s licence to build a new casino complex in Sydney to attract more Asian high-rollers, has been agitating for change at Echo after building a 10 percent stake in the company, and on Friday succeeded in ousting the company’s chairman.
Analysts speculated that Genting, Southeast Asia’s largest gaming group, was preparing for an acquisition, having built up a war chest of S$3.9 billion ($3.1 billion), and said Echo’s casinos were in cities where Genting had attempted to win licences in the past.
“At this juncture it does seems like a possibility... They have that war chest and will have to deploy it soon,” said Loke Wei Wern, a CIMB Research analyst based in Kuala Lumpur.
A Genting spokeswoman declined to comment on whether the company was considering a takeover offer or to disclose its stake, but Genting said in a statement the total value of its investment in publicly quoted securities was S$298 million ($234 million). The Australian newspaper said earlier that Genting had built up a 4.9 percent stake in Echo, which runs Sydney’s Star casino and Jupiter’s on the Gold Coast of Australia.
A full takeover would cost more than A$3 billion ($2.96 billion) and both Packer and Genting would face tough regulatory scrutiny.
Echo said separately that its chairman, John Story, has resigned, bowing to a destabilising campaign run by Packer who owns a rival casino operator and wanted to sack the chairman.
“(John) Story going is more like a soap opera. The money in this saga is with Genting being on board,” said Richard Colqhoun, a portfolio manager at Antares Capital, which owns shares in Echo.
Shares in Echo topped the gainers in a broadly weaker S&P/ASX 200 Index, rising as much as 4 percent to value the company around $3 billion.
Genting Group, whose biggest assets are Malaysia’s Genting Highlands casino complex and Singapore’s S$6.6 billion Resorts World at Sentosa, also has stakes in Resorts World Manila and several UK casinos.
The group is headed by Lim Kok Thay, who is chairman and chief executive of Malaysia’s Genting Bhd and executive chairman of Genting Singapore, and knows Australia well.
The Malaysian Genting Group was a founding shareholder in the Burswood casino in Perth, which is now owned by Packer’s company.
A source familiar with the situation said the board of Echo had not had any discussions with Genting ahead of the news about its stake.
Packer, who has stakes in casinos in Australia, London and Macau, wants to boost his company Crown Ltd’s 10 percent stake in Echo and win a board seat. Crown had put forward a resolution to remove Story at a July 20 shareholders meeting.
Packer has attracted several former politicians to help with his lobbying cause, including former Victorian state premier Jeff Kennett as Packer’s nominee to the board of Echo.
Echo said in a statement on Friday that Story wanted the shareholders to vote on his position, but accepted the board’s view that he should resign ahead of the meeting.
“ The board of Echo has formed the view that the ongoing disruptive campaign concerning the resolution proposed to be put to an Extraordinary General Meeting of Echo for the removal of Mr Story was damaging to the company, and that it was in the best interests of shareholders that Mr Story not contest the resolution,” Echo said.
Crown had argued that Echo was underperforming under Story’s leadership.
Echo completed a costly A$870 million refurbishment of its Sydney Star casino last year but has not yet seen a substantial pick-up in revenues, according to analysts.
Crown owns casinos in Melbourne and in Perth, and about a third of Melco Crown Entertainment, which has casinos in Macau. It wants Echo’s casino licences in Sydney and the Gold Coast because they are more likely to attract Asian high-rollers than Melbourne and Perth.
Echo’s licences are “irreplaceable,” said UBS analyst Sam Theodore, adding that Sydney and the Gold Coast would be especially attractive to international VIP players.
Perpetual Investments, Echo’s second-largest shareholder after Crown, said it does not intend to support Crown’s push for a board seat, according to the Australian Financial Review. ($1 = 1.0063 Australian dollars) ($1 = 1.2754 Singapore dollars) (Additional reporting by Charmian Kok; Editing by Chris Gallagher)