(Bloomberg) -- Rank Group Plc, the U.K.'s second- largest casino and bingo company, rose in London trading after Malaysia's Genting Bhd. acquired a stake, fueling renewed takeover speculation.
The shares climbed 8.7 percent, boosting the company's market value to 426.7 million pounds ($882 million). The purchase of a 9.4 percent holding by Genting, Asia's largest publicly traded casino operator, ``makes a takeover of Rank within the next 12 months more likely,'' Evolution Securities analyst Ivor Jones said today in a note.
Genting spokesman Justin Leong declined to comment on the reasons for the purchase. The Malaysian company bought the stake to block potential rival bids, the Sunday Times said yesterday. Ladbrokes Plc and Aspers, a joint venture between Damian Aspinall and James Packer, Australia's richest man, are interested, the newspaper said, without citing anyone.
``They have always been talking about wanting to expand in the U.K.,'' said Hoe Lee Leng, an analyst at Malaysia-based RHB Research Sdn., who rates Genting's stock ``outperform''. ``The U.K. gaming market is still fairly widespread, and there are still many opportunities for growth.''
Rank shares gained 8.75 pence to 109.25 pence in London. The stock has risen 41 percent since falling to the lowest in at least 19 years on Nov. 22.
Casinos, Bingo Halls
Kuala Lumpur-based Genting held the stake as of Nov. 29, Rank said today. The holding is registered in the name of Palomino Ltd., a unit of Genting International Plc.
Genting financed the acquisition using a combination of its own cash and some of the proceeds of a rights issue that was completed in September, a statement shows. The purchase probably won't have a material effect on per-share earnings and consolidated net tangible assets for 2007, Genting said.
Rank has lost about half of its market value this year after an English smoking ban began in the summer, driving away bingo players and gamblers. The Maidenhead, England-based company has 102 U.K. bingo clubs and 33 casinos, as well as 11 Spanish bingo halls, two Belgian casinos and the Blue Square betting Web site.
Rank has been the subject of bid speculation. The Sunday Telegraph reported last month that the company rejected a bid from Harrah's Entertainment Inc. Evolution said last week that GuocoLeisure Ltd., which was previously known as BIL International Ltd., may be buying Rank shares.
Packer, Aspinall
Packer's Publishing & Broadcasting Ltd. is splitting into media and gaming arms and shares ownership of U.K. casino company Aspinall's with Damian Aspinall. The Australian inherited the company after the death of his father, Kerry Packer, in 2005.
``Rank's casino assets are likely to be more attractive to a buyer than its bingo business,'' Evolution's Jones said. Genting may close unprofitable casinos should it add Rank's venues to the Stanley Casinos it already owns, he said.
Genting became the U.K.'s largest casino owner after buying Stanley Leisure Plc last year. Closely held Gala Group is the country's biggest bingo company.
Rank said in October profit probably would miss its forecast after England's smoking ban drove away gamblers and new laws forced the removal of some electronic gaming terminals that offer higher jackpots. Without any improvement, operating profit would fall ``significantly'' this year, it said at the time.
The company is vulnerable to prohibitions on tobacco use because about half of bingo players smoke, twice the rate of Britain's general populace, according to executives.
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