Britain’s biggest casino operator, Stanley Leisure, today confirmed reports that it is holding merger talks with London Clubs International.
A merger would take place through a share-for-share exchange on the basis of one new Stanley share for every six London Clubs shares, reflecting the market capitalisations of the two companies.
Stanley Leisure, based in Liverpool, has a market value of GBP 443.9m, compared with GBP 236.6m for London Clubs, so a merger would create a company worth almost GBP 700m.
Stanley operates 45 casinos, with four in London, including Crockford’s and Colony. London Clubs currently runs six casinos in the UK, with one new application in the pipeline, and approved projects under way in Glasgow, Manchester, Nottingham, Leeds, Blackpool and Leicester Square in London.
The merger has the backing of Genting, the Malaysian gaming group which owns a 29.7% stake in London Clubs and a 13.4% stake in Stanley.
Casino companies are repositioning themselves after the government’s decision last year to deregulate Britain’s gaming laws. As part of the deregulation, restrictive membership rules for casinos were scrapped.
The move boosted admissions to many casinos by more than 10%, although revenues have yet to show corresponding gains, as many new casino-goers have avoided big bets so far.
Last month, Stanley Leisure reported a 17.2% rise in attendance in the six months to April 30, compared with the same period the year before.
But overexpansion could be a problem for operators. The government has received about 90 applications to relocate casinos or build new ones. The government is also set to issue 17 new licences, including one for a „supercasino“.
Stanley Leisure itself is expanding. Since the start of the year, the company has been granted licences in Nottingham, Liverpool and Sheffield. It has another five new licence applications for casinos in the provinces and six new licence applications in respect of relocations in the pipeline.
Both companies reported a drop in business at their London casinos after the July bombings of last year. London Clubs sold its flagship Les Ambassadeurs club after it was badly affected after the July attacks.
In morning trading, Stanley Leisure was up 2.1% at 649p, while London Clubs was virtually unchanged at 107p.