Lawrence Ho’s Melco International Development Ltd. is considering a complete takeover of electronic gaming machines supplier Entertainment Gaming Asia.
Nasdaq-listed Entertainment Gaming Asia announced in a filing that its biggest shareholder, Melco International, “is reviewing potential strategic alternatives” that may include “making an offer… to acquire all of the outstanding common stock” of the company that it does not already own.
Melco International, which holds approximately 64.8 percent of Entertainment Gaming Asia, is drumming up a proposal to stockholders “in the range of approximately US$2.10 to US$2.25 per share, in cash via a tender offer.”
“Any such Proposed Transaction would be subject to a number of conditions, including the valid tender of at least a majority of the issued and outstanding Common Stock, excluding Common Stock owned by EGT Entertainment,” the company said. “Any such transaction would be financed using available cash on hand.”
No offer has been made yet, Entertainment Gaming Asia clarified, stressing that “Melco International notes that no determination to make an offer has been made and Melco International may not make any such offer.”
Entertainment Gaming Asia has been undergoing a full-body makeover that has seen the company ditch its own Cambodian gaming halls, scrap its electronic gaming machine leasing deals with other Cambodian casinos, sell off its Dolphin Products casino chip and plaque manufacturing business. That left EGT with only its Philippines-based slots operations and its nascent social gaming division.
The company reported a net loss of $6.7 million on revenue of $357,000 in the fourth quarter of 2016.
Aside from Entertainment Gaming Asia, Melco International is also the controlling shareholder of casino developer Melco Resorts and Entertainment Ltd, which operates integrated resorts in Macau and the Philippines. Melco International reported a net profit of HKD10.37 billion (US$1.33 billion) for full-year 2016, up from a net profit of HKD100.9 million in 2015.