Malaysian gaming and leisure giant Genting Berhad (GENT) has launched a $1.6 billion takeover offer for the remaining 50.6 percent of Genting Malaysia (GENM) it does not already own, a move analysts say could strain the parent company’s finances while modestly benefiting its subsidiary.
The conditional offer, priced at MYR2.35 ($0.50) per share and contingent on GENT retaining a majority stake, would be largely funded by debt, with up to MYR6.3 billion ($1.4 billion) borrowed.
If successful, the bid could result in GENM’s delisting from the Bursa Malaysia stock exchange, though analysts at CreditSights say the privatization threshold is unlikely to be met without a higher offer.
‘The deal is a credit negative for Genting Berhad,’ said CreditSights, citing concerns that GENT’s pro-forma net leverage could rise nearly a full turn to 3.8-3.9x, potentially complicating refinancing of a $1.5 billion bond maturing in January 2027.
The analysts also noted GENT may need to sweeten the offer to attract enough shareholders, adding further pressure on cash flows amid ongoing capital expenditures in Singapore and New York.
For GENM, however, the takeover is seen as modestly positive, strengthening ties with its parent and increasing the likelihood of financial support for its planned New York casino expansion. The subsidiary could also benefit from reduced compliance and listing costs if delisting occurs, although analysts caution that governance risks remain.
CreditSights has maintained a Market Perform rating on GENT while upgrading GENM to Outperform, noting that the parent company’s global diversification, potential earnings gains from Singapore, the UK, and Las Vegas operations, and cash-rich Genting Singapore subsidiary mitigate some risks.
Bond markets reacted negatively to the announcement, with GENT and GENM debt spreads widening by roughly 50 basis points. CreditSights said GENM’s bonds now trade 115 basis points wider than Sands China, suggesting that the market currently undervalues the subsidiary given stronger parental support under the takeover bid.
GENT currently holds a 49.4 percent stake in GENM, with remaining shareholders mainly institutions including Vanguard, OCBC, State Street, and AIA, each holding less than 2 percent. The offer is open until November 3rd and requires clearance from the Malaysian Securities Commission.
‘While stronger parental control has benefits, the strategic rationale is questionable given the deal is heavily debt-funded at the parent level,’ CreditSights said. Analysts do not expect immediate rating actions for either company, though credit rating headroom at Moody’s and Fitch could narrow.
The takeover comes as Genting eyes expansion in the US, including a major casino project in downstate New York, part of its broader push to strengthen international operations.
