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NEW YORK (BLOOMBERG) – Sheldon Adelson’s Las Vegas Sands Corp is exploring the sale of its Las Vegas casinos, according to people with knowledge of the matter, a move that would leave the mogul focused on Asia and mark his exit, for now. of the US gaming industry.
Sands, the world’s largest casino company, is working with an advisor to solicit interest in the Venetian Resort Las Vegas, the Palazzo, and the Sands Expo Convention Center, which together can reach US $ 6 billion (S $ 8.2 billion) or more, the people said: who asked not to be identified because the conversations are private. All properties are connected along the famous strip of the city.
A representative for Las Vegas Sands confirmed that it was in very early discussions about a sale and that nothing has been finalized.
A sale would concentrate Sands’ portfolio of casinos entirely in Macau and Singapore, where it owns Marina Bay Sands. They are the two largest casino markets for Adelson, who ranks as one of the richest people in the world, with an estimated fortune of $ 29.7 billion. The United States was already a small and dwindling part of his business, accounting for less than 15 percent of revenue last year.
“The growing insignificance of the US market explains why Las Vegas Sands is looking to divest its US properties,” said Ben Lee, managing partner of Macau-based IGamiX. “It’s 15 percent of the revenue, but 80 percent of the regulatory pain and burden.”
MARINA BAY SANDS REBOUND TO BENEFIT
A recovery in Asia helped improve Sands’ operating results in the third quarter, Adelson said in an earnings call last week.
Sands lost nearly three-quarters of a billion dollars in the third quarter, with Singapore being the only market that generated positive earnings.
Last week’s third-quarter results showed that Marina Bay Sands generated a profit of $ 70 million, down 84 percent from a year ago, but a huge reversal from the $ 113 million loss it suffered in the second quarter. after a shutdown of nearly three months. .
Revenue amounted to $ 281 million, down 64.6 percent year-on-year. Occupancy scored a surprisingly high 55.5 percent as operations progressively resumed throughout the complex.
Sands posted revenue of $ 586 million for the three months ended Sept. 30, a year-on-year drop of 82 percent but a big step above the $ 98 million it saw in the previous quarter. Sands posted an adjusted profit loss of $ 203 million in the third quarter, while reporting a net loss of $ 731 million versus $ 669 million a year earlier.
MAKES SENSE
The money from the sale of the Las Vegas casinos could allow the company to finance other development opportunities. Sands withdrew from the competition to build a casino in Japan earlier this year on terms that executives described as unfavorable. Adelson, 87, has expressed interest in building in New York City, an opportunity that could arise next year.
A recovery in Asia helped improve Sands’ operating results in the third quarter, Adelson said in an earnings call last week. In Singapore, Marina Bay Sands had a profitable quarter as operations gradually resumed throughout the resort over the summer.
The money from a sale could allow the company to finance other development opportunities. Sands withdrew from the competition to build a casino in Japan earlier this year on terms that executives described as unfavorable. Adelson, 87, has expressed interest in building in New York City, an opportunity that could arise next year.
The stock rose as much as 12 percent in after-hours trading on Monday (October 26) after Bloomberg reported news of the deal. The shares had closed 3.1 percent at $ 49.13.
MAKES SENSE
With the global pandemic creating uncertainty in the Las Vegas convention business and an implicit price for properties of 12 times earnings before interest, taxes, depreciation and amortization, a deal could make sense, wrote Ben Chaiken, an analyst at Credit. Suisse, in an investigation. note late on monday. He added the caveat that it is unclear who would buy the casinos.
Adelson is president, CEO and majority shareholder of Las Vegas Sands, which has a market value of $ 37.5 billion.
Casinos in Macau, the world’s largest gambling market, generated 63 percent of the company’s $ 13.7 billion in revenue last year, before the pandemic broke out. Covid-19 has devastated the casino industry as it has other businesses where people gather in large numbers, such as cinemas, concerts, and restaurants.
Singapore ranked second with 22 percent.
Sands is expanding in both regions, and Macau alone is earmarked for spending $ 2.2 billion.
Bloomberg Intelligence senior gaming and hosting analyst Brian Egger said: “The potential sale of its Las Vegas assets for $ 6 billion could fund those Asian projects, while $ 6.3 billion of existing liquidity they would be enough to keep operations idle for 17 months. China’s lifting of visa restrictions should benefit Sands in Macau. “
Macau’s recovery from Covid-19 restrictions has been slow after China gradually lifted travel restrictions and formed a travel bubble with the gaming center. Visitor arrivals from mainland China during the Chinese Golden Week holiday in early October were down 84 percent from the previous year. However, there are signs that punters are starting to come back in volume as the visa backlog clears.
“We are seeing an increase in real tourists on the ground in Macau,” said Mr. Lee of IGamiX. “The profile of Chinese tourists is dominated by young women and families, mainland Chinese take advantage of the cheap accommodation that is offered.”
With additional information from The Straits Times
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