Ruztynail, I have attributed GEN UK failure in my previous post as a bad call and
bad luck . Yes, there are smoking ban and all that. But, the reason they buy big into UK is that they anticipate the legislation changes in UK to allow vegas style super-casino. Have they done enough analysis to determine the probability that UK legislation won't go through? Or they are too eager to expand quickly? They should have take into account the gaming taxes when going into the country. Taxes is one of the key component that will make or break an acquisition, I am sure they have price in into the acquisition price. The management can always blame other issues when an acquisition do not perform well. If not, what they can do?Admit they are wrong? That's why I hate acquisition, it is more likely to fail than succeed regardless of whether it is related party or not.
I am not saying that GENM management is sitting back. I am saying that they have
no clue how to turn this mess around but still try to assure to the shareholders that they have the ability and experience to turn it around. The fact is that the only experience they have is running a monopoly in Asia but this casino is in Europe. Genting itself have no good record when doing overseas mega acquisition. So, that's make the minority investors unhappy. Because, if you have no ability to find good projects, you may as well return the cash to the shareholders not embarking on empire building and cash hoarding. The fact that I don't run a big company or don't deal with them personally does not mean that I cannot criticize them. It is like saying I can't criticize Najib because I don't work with him and I have not been a PM. I can look at the management track record to determine whether this LKT and the gang are good manager.
The key contention here is GENM treatment of its shareholders. GENM is not a division that the the Genting group have 100% ownership, so, when the management make decision on GENM, they have to consider the interest of GENM, not the interest of a group. In this case, it is clearly a decision make in the interest of a group. Obviously, Genting Group benefit from this deal, but, the minority shareholders in GENM suffers. The management promises acquisition to expand it reach, so, the some investors buy into the management talk. But, now, they turn around and buy GEN UK. It is not the type of acquisition that the minority shareholders expected.
What I hope now is that GENM sell some of its GENUK stake to some private equity, like what they have done for NCL. Let those private equity guys turn this mess around, because the GENM management have no clue how to deal with this mess.
Added on July 3, 2010, 4:09 pmBoth suggestion are good. But too bad that Genting or GENM don't have enough resources to buy over GENS. It is too expensive for them. Plus the current structure allows these subsidiaries to be properly valued and more importantly, for Lim Family to control these businesses without putting in too much cash.
BTW: Have you noticed that almost all the big deals were done with one person from HongKong, since Star Cruise purchase .
Jun 20 2008, 09:33 AM
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lol..
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