Stanley Leisure and London Clubs in merger talks

Stanley Leisure and London Clubs in merger talks

	Published : Mon, 26 Jun 2006 16:05 By : James Rowe Print this Story

LONDON - Stanley Leisure announced on Monday that it was in exclusive merger talks with rival London Clubs International. It added that if the deal were to go through every Stanley share would be equivalent in value to about six London shares.

However talks between the two companies re at a very early stage since they began just two weeks ago and it is not clear if the merger would indeed be completed. JPMorgan Cazenove is advising Stanley Leisure in the deal, while London Clubs International has appointed Rothschild as its advisor. Liverpool-based Stanley Leisure has a market value of £443.9 million, as compared with £236.6 million for London Clubs. A merger would theoretically create a group with a market value of £700 million. It is reported that the merger is being favorably looked upon by Genting; the Malaysian gaming group that owns a 29.7 percent stake in London Clubs and a 13.4 percent stake in Stanley Leisure.

Bob Wiper, chief executive of Stanley Leisure is said to be the frontrunner to lead the merged company. In a joint statement issued by the companies, Stanley and LCI said that discussions were ongoing, but there was 'no certainty that they will lead to a transaction'.

Analysts feel that a merged group might pique the interest of Ladbrokes or any other big international company looking to establish a foothold in the UK market. "This enlarged entity could prove to be a very attractive target to any larger gaming operator," Altium analyst Greg Feehely said. But Investec analyst Matthew Gerard was cautious and said any merger could dilute the value of Stanley, "Whilst we think the long-term rationale for such a deal is compelling, the timing ahead of the allocation of new casino licenses is questionable. For Stanley shareholders, any deal is also likely to be dilutive," he added.