Las Vegas Sands is looking at the possibility of acquiring Crown Resorts according to reports in the United States. Okada Manila and Wynn Resorts are two other possible gambling giants Las Vegas Sands wants to swallow up.
The live casino industry lays in tatters due to the ongoing COVID-19 pandemic. Crown Resorts and The Star both stood down thousands of staff in a drastic cost-cutting measure. Both Aussie casino operators have seen revenue streams dry to less than a trickle.
A lack of income forces a company’s share price down, making them more affordable. Not that money is an object for Las Vegas Sands’ owner Sheldon Adelson because he’s worth almost $48 billion. But even the mega-rich look for deals, and a cut-price Crown Resorts certainly fits the bill.
Rumours started in April when Adelson made comments during a conference call discussing Las Vegas Sands financial figures. Adelson hates online casinos and sports betting. He spends millions of dollars annually to lobby against them.
“We are interested in Mergers and Acquisitions. I’m not going to give up on developing Integrated Resorts. I’m going to add on to our strategic thinking, strategic priorities that we can acquire because most of the other companies don’t have the balance sheet that we do, and they don’t have the potential market we do. Now I’m taking on the strategy of both acquiring and building, and developing.”
John DeCree is the Global Head of Institutional Research at Union Gaming. This is an investment bank that specialises in the casino and hotel sector. DeCree used Adelson’s comments for his recent analysis, which singled out Crown Resorts, Okada Manila, and Wynn Resorts.
Would Crown Sell To Las Vegas Resorts?
DeCree singled out Crown Resorts due to its recent troubles. Crown is no longer on great terms with Australian regulators following the Melco Resorts debacle. The Australian gambling giant laid off more than 10,000 staff and needs to reopen sooner rather than later.
James Packer was left high and dry when Lawrence Ho pulled out of their stock sale deal. Ho was meant to purchase $1.75 billion of Crown stock from Packer in two transactions. Half the deal went through, but the Aussie authorities got involved and began investigating both Crown and Melco.
Melco eventually pulled out of the remainder of the deal and has since binned the stock it did purchase.
This left Packer with more Crown shares than he intended. Reports in Australia suggest Packer wants completely out of the casino business. He currently owns 46% of Crown’s shares, which are worth $415,380,000 at the current price. A concrete offer from Las Vegas Sands could see Packer get his wish of walking away from the gambling industry.
Las Vegas Sands will be in a position of a complete takeover if they get their hands on Packer’s shares.
A Crown Acquisition Would Be Second Or Third Choice
Acquiring Crown Resorts at a relatively budget price is appealing for Las Vegas Sands, but it isn’t their first choice. Either Okada Manila or Wynn Resorts is more attractive and makes more sense long term.
Wynn Resorts’ Macau operations are seriously struggling. The company reported a $154 million loss during the last quarter as Macau recovered from COVID-19 related closures. Chinese businessmen may be prepared to cash in with there being no timescale on a full recovery.
This potential deal makes the most sense to DeCree.
“It makes the most strategic sense for Las Vegas Sands. It would add US$1.6 billion of in place EBITDA immediately, plus cost synergies. Las Vegas Sands would gain 2,700 additional rooms in Macau and a significant increase in exposure to the higher-end premium mass and VIP segments.”
Okada Manila remains an attractive target as the Philippines market is following trends set by Macau. The regulated gambling sector does have the draw of Las Vegas or Macau, but signs are it will do eventually.
DeCree said the region possesses many of the same attributes that made Macau investments attractive 15-years ago.