Sun City tycoon dogs Wembley bid

Kerzner troupe's swoop for stake may force MGM to sweeten terms

A consortium lead by Sol Kerzner, the billionaire who created the Sun City leisure resort in the South African bush, yesterday moved to derail an agreed £270m bid for Wembley by acquiring an 8% stake in the dog racing and gambling group.

In the wake of the purchase, BLB Investors, which counts private equity group Starwood Capital among its backers, said it had approached the board of Wembley about the feasibility of making an agreed offer for the company. Wembley recently recommended a 750p-a-share offer from MGM Mirage, the $6bn Las Vegas-based gaming company.

BLB bought its stake for 800p-a-share from Active Value Fund Managers, the dissident investor which held 23% of Wembley. The consortium said it had an agreement to buy the remaining 15% if it tables an offer for Wembley before the end of the month.

BLB said its decision on whether to make a counter offer would depend on its due diligence work on Wembley.

Wembley is facing court proceedings in the US over allegations that the company sought to boost the prospects of Lincoln Park, its Rhode Island gaming and dog racing complex, by bribing state officials.

BLB's interest pushed Wembley shares up 65p to 820p, valuing the company at £284m, as City traders bet that MGM would respond with an improved offer of its own.

A spokesman for MGM said the company had noted the BLB announcement "with interest", but pointed out that the consortium had yet to table a firm proposal. "We are proceeding as planned with our offer, which we believe represents great value for Wembley shareholders."

City analysts believe that MGM, which is jockeying for position in the UK gaming market ahead of the relaxation of gambling regulations, has little alternative but to sweeten its terms if it is to see off Mr Kerzner, owner of the Bahamas' Atlantis resort.

"We would be very surprised if MGM did not revisit its offer. It clearly has the financial wherewithal to do so, and we are very close now to April 8, when the joint parliamentary scrutiny committee is set to outline a clear timetable for the deregulation of the UK gambling industry," said Greg Feehley at Altium Securities.

Although MGM is principally interested in Wembley's Lincoln Park complex, it is also keen to get its hands on the company's six UK racing tracks, which could be used as a base to install thousands of slot machines.

Mr Kerzner, who made his fortune in apartheid South African, wants to become a leading player in UK gaming. He is rumoured to be planning a Las Vegas style casino resort at the Millennium Dome. His first project in the UK will be in Northampton. His New York-listed company Kerzner International recently announced plans to build an Atlantis resort in Dubai.

Source: The Guardian