UK racetrack owner Wembley Plc lost a third of its value on Monday after its US suitor pulled out of a 309 million pound ($567 million) take-over deal, citing uncertainty over one of Wembley's key US assets.
BLB Investors, a consortium including golf courses-to-hotels firm Starwood Capital, said it had allowed its agreed 860-pence-per-share offer to lapse as the environment in which Wembley's Lincoln Park business in Rhode Island operated had become "highly uncertain."
A BLB spokesman declined to elaborate. But industry sources said US gaming group Harrah's Entertainment planned to redevelop a rival casino in Rhode Island, potentially threatening business at Lincoln Park, which analysts say accounts for over 90 percent of Wembley's profits.
The new casino is expected to be taxed at rates substantially lower than Lincoln Park, the sources said.
Wembley shares plunged 32.4 percent to 575 pence by 1058 GMT, their lowest level in more than six months and knocking the firm's market value to about 206 million pounds. The stock rose to 892-1/2p last May at the peak of a take-over battle for the company.
Wembley said it noted BLB's decision, but pointed out that trading was in line with its expectations.
BLB, which also includes Bahamas resort owner Kerzner and leisure firm Waterford Group, in May beat a rival offer from US casino giant MGM Mirage for Wembley, which owns dog and horse racetracks and runs video and slot machines in Britain and the United States.
MGM Mirage, owner of 12 casino resorts such as Treasure Island and three championship golf courses, started the take-over race for Wembley with a 750p-per-share agreed deal in January. It later raised its offer to 840p per share, only to be outbid by BLB's 860p-a-share cash offer in April.
The two US groups were battling to take advantage of an anticipated relaxation of Britain's strict gambling laws, which analysts had expected to lead to a new boom in betting.