Genting Launches RM6.7 Billion Takeover Bid for GENM
Genting Bhd (Genting) has made a decisive move to consolidate its gaming and hospitality assets by announcing plans to buy out the minority shareholders of its subsidiary, Genting Malaysia (GENM), in a transaction valued at RM6.7 billion, or approximately S$2.1 billion.
This conditional voluntary takeover offer, if successful, will result in the delisting of GENM from Bursa Malaysia, bringing its operations fully under the control of the parent company.
In a formal filing with the stock exchange on Monday, October 13, Genting disclosed the offer price is set at RM2.35 per share, representing a significant premium of nearly 10 per cent over GENM’s last-traded price of RM2.14 before trading was suspended in anticipation of the announcement.
Trading for both Genting and GENM shares was halted on Monday.
The parent company, which already holds more than 49 per cent of GENM’s equity, is confident that the acceptance condition requiring more than 50 per cent of the total shares can be met at the proposed offer price.
Genting stated that the primary objective of this offer is to “secure statutory control of GENM,” a strategic maneuver that is expected to facilitate greater agility in capital allocation and provide enhanced support for future large-scale investments the conglomerate is planning.
To finance this substantial acquisition, Genting has indicated it will utilize a combination of RM6.3 billion in debt financing and its own internally generated funds.
This consolidation move comes at a critical juncture for the subsidiary as Genting Malaysia intensifies its lobbying efforts in the United States to secure a coveted, highly-lucrative casino licence in the competitive New York market, a key potential growth driver.
Consolidating Assets for High-Stakes Expansion
The timing of Genting’s buyout proposal is closely intertwined with Genting Malaysia’s high-stakes pursuit of a New York casino licence, where its US arm, Resorts World New York City, is proposing a massive US$5.5 billion (RM23.2 billion) integrated resort in Queens.
Taking GENM private is widely seen by analysts as a necessary prelude to grant management the greater agility required to make swift strategic decisions and commit the substantial capital investment that the New York project would demand if it materializes.
The RM2.35 per share offer values GENM at multiples of 9.1 times Enterprise Value-to-EBITDA, 53 times earnings, and 1.12 times book value, based on the subsidiary’s audited 2024 results, providing minority shareholders with an immediate exit at a premium ranging from 9.81 per cent to 22.9 per cent above the subsidiary’s 12-month market prices.
The move could also pave the way for a broader internal restructuring within the Genting group.
Tradeview Capital portfolio manager Neoh Jia Man suggested that the potential privatization may be designed to streamline internal reorganisation, including the possible spin-off of some of GENM’s real estate assets into a Real Estate Investment Trust (REIT) structure to unlock latent value.
This structure would further support the parent company’s capital needs.
He also noted that Genting’s shareholders stand to benefit significantly from the potential award of the new gaming licence in New York state, where GENM remains among the four highly shortlisted contenders, highlighting the long-term upside driving the parent company’s strategy to consolidate control.
While the RM2.35 offer appears fair based on trailing financial multiples, the roughly 10 per cent premium to the last-traded price has left some minority investors underwhelmed, although analysts note there remains room for a potential upward revision to the offer price.
Market Reaction and Historical Comparisons
The move by Genting to secure full control of its subsidiary draws historical comparisons within the Malaysian corporate landscape, particularly to the 2007 privatization of Maxis Communications, then the country’s largest mobile operator, by billionaire T. Ananda Krishnan.
That RM17.4 billion buyout was subsequently followed by a US$3 billion investment from Saudi Telecom Company, which enabled Maxis to embark on aggressive expansion into major markets like India and Indonesia.
This historical parallel carries a cautionary note, as an analyst recalled that many minority shareholders felt “sidelined” at the time of the Maxis deal, noting that once the promoters secured more than half the equity, minorities had little recourse to stop the process.
Genting’s current offer, therefore, could evoke similar sentiments among GENM’s smaller shareholders who have seen their stock largely fail to regain its pre-pandemic highs.
GENM’s stock performance has been hampered by significant pandemic-related losses and ongoing investor concerns over related-party transactions, specifically after the company absorbed Empire Resorts, a loss-making US casino previously controlled by the Lim family, the founders of the Genting group.
This weakened market position is reflected in both Genting and GENM being removed from the FBM KLCI benchmark index earlier this year due to their diminished weighting in Malaysia’s equity market.
Retail investors, who have historically shown strong interest in Genting-linked counters due to the group’s near-monopoly in the casino sector, are expressing disappointment.
The stock traded above RM3 before the Covid-19 pandemic struck in early 2020, and a retail investor mentioned taking a loss of “around RM2,000” at the current offer price, underscoring the delicate balance between strategic corporate maneuvers and minority shareholder value.
