Well the value of GENS will be unlocked since they are no more write-downs. This may also indicate that the Singapore operations is going extremely well that they want to do the deal fast to bring it off their books. Today is first of July, so, the 2nd Quarter just closes. This will make GENS carry another quarter of GEN UK result on its books. I think it is on purpose they announce today so that GENS have a clear 3rd Q without GEN Uk dragging them down. Doing it on 1st July also means the GENM side do not need to carry the deal on its books for 2nd Quarter. So, in the event that GEN UK result really bad, some GENM may not have notice that if they don't pay attention to GENS announcement. So, this will give the shareholders time to cool down and don't get that angry.

All these corporate move I think have been planned ahead all this while. GENS just take a huge impairment on GEN UK asset on 1Q, probably preparing for disposal to GENM. Then, GENS somehow issues a big chunk of share options of GENS to LKT and the gang for successful opening of the Singapore operation. In fact, the Singapore operation is just a few months old, how you judge it is successful when, at the time of the option approval, Marina Bay Sands has just opened at most for a few weeks? They are basically rushing out the options so that they can make it in time before the disposal is made so that they will make money from these options when GENS price explode.

This bags a question. Where on earth is GENM independent directors? What they are doing? Most laughable is GENM COO statement :"The acquisition
of Genting UK presents GENM with an opportunity to grow, with the resources at our disposal. This acquisition will also provide us with access to established casino brands and an extensivenetwork of casinos already operating across the UK. The acquisition of Genting UK presents GENM with an opportunity to grow, with the resources at our disposal.This acquisition will also provide us with access to established casino brands and an extensive network of casinos already operating across the UK. With our proven track record and decades of experience, we have the expertise to unlock the potential of Genting UK and grow the UK business.’’ Mr COO, I thought Genting is always run as adik-beradik company, as in you share your management talent around. So, how come by changing hands from GENS to GENM, GEN UK can suddenly be a good business? If your management skill is so good, why don't LKT faster tell you to go GENS to turn GEN UK around?

For question on buying GENS,I personally prefer Genting Bhd as it is the cheaper play on GENS, but, this news will be treated as neutral i guess at Genting Bhd level. But, GENS may increase with analyst re-rating. Rational market will see Genting Bhd to increase when GENS increase, but, as we can see previously, even though GENS increase a lot, Genting Bhd increase by a bit only. So, GENS will be a more direct play.

But, I would not touch Genting Bhd at current price level because the management will rip you off anytime, so, you need a margin of safety. GENS is also expensive on the fundamental side. But, market is irrational. I won't touch both of them at this level.

BTW, I own Genting Bhd shares, so, my view may be bias. Do take it with a pinch of salt.

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Added on July 1, 2010, 11:54 pmJust write a post on my blog about this acquisition. Feel free to read if you are interested: http://goodstockbadstock.blogspot.com/2010...d-it-again.html

I don't like how they are just selling GEN UK to GENM. The UK casinos still aren't doing very well, and it just seems like they are disposing the not so profitable businesses to genm and get some of genm's cash over to gens.

They can do so much better with the 5b cash in hand.

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.

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Added on July 3, 2010, 4:09 pm

Both 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.

Not sure whether GenM share price has been fully factored in or not, with current RPT.

But I do know one analyst has cut the  Fair Value  of GenM from about rm 8 to as low as rm 4. I believe some analysts think at current price  of GenM is fully valued.

Note:  Fair Value is just a pure guideline. But something to guide is better than none if you are a value investor.

If you are a value investor, you may want to give some further discounts to future RPTs ( probably ) , then you may have concluded GenM is in fact not very undervalued as before. And the risk is getting higher.

Just my view.