Compulsive Gambling

Casino Giants In Talks About Merger

Casino big names Stanley Leisure and London Clubs International (LCI) confirmed June 26 that they are in the middle of talks discussing a merger, a move that could culminate into a mammoth £700 million-plus union. The two casino operation firms have been in the initial phase of their discussions over the last two weeks. However, there has been no announcement yet as to who will be in charge if the merger of the two rival casinos will push through.

The deal could possibly translate into the creation of a gaming giant that will boast of more than 50 casinos throughout the United Kingdom.

Stanley is already currently UK's largest casino operator, running Crocksford casino in Mayfair and 40 regional sites. In Edinburgh, Stanley already operates three casinos --- in Rutland Place, York Place and Ocean Drive in Leith. Last week, it also acquired the Harbour House Casino in Southampton for £5.9 million.

In 2005, Stanley has given out a strong signal that the company is strengthening its gaming interests by dropping its betting shops, selling them to William Hill for £504 million. The firm cited the reason being that they are aiming to concentrate on its casinos. However, the possible tie-up would be potentially the biggest deal to date for Stanley.

Another strong indication of a possible merger is the coming in of Malaysian conglomerate Genting. It came into play last year and has since been an important shareholder of the two companies. It's a 12 percent shareholder in Stanley, while it holds nearly 30 percent of LCI.

Stanley has made a previous takeover attempt almost four years ago when LCI was undergoing a crisis brought about by a disastrous investment in Las Vegas. The takeover proposal was turned down. LCI has since recovered from the Vegas mishap and has recently sold its Les Ambassadeurs flagship club in Mayfair.

Should the merger push through, it is likely that one Stanley share would be traded for six LCI shares, as stated in a joint statement earlier that day. "Discussions are ongoing and there is no certainty that they will lead to a transaction," they further stated. Stanley Leisure shares rose 15 to 650p in morning trade and London Clubs stock rose 2p higher to 109p.

The casino industry has been benefiting recently from the relaxing of gambling laws last year. This has prompted many casino operators to take advantage of this opportunity, and some have been taking on measures to take full advantage. The merged company, for instance, would stand a better chance of bagging gambling licenses that are currently being issued by the government.