Las Vegas Sands has reached an agreement with two separate investment groups that will see it sell its entire Las Vegas portfolio for US$6.25 billion.
The company announced late Wednesday (Asia time) that funds managed by affiliates of Apollo Global Management, Inc will acquire LVS subsidiaries that hold the operating assets and liabilities of the Las Vegas business for US$1.05 billion in cash and US$1.2 billion in seller financing in the form of a term loan credit and security agreement. The company’s real estate assets, including The Venetian Resort Las Vegas and Sands Expo and Convention Center, will be acquired by VICI Properties Inc for approximately US$4.0 billion in cash.
Chairman and CEO Rob Goldstein said in a statement that by leaving Las Vegas, LVS would instead focus its resources on reinvestment in Asia and high growth opportunities in new markets.
“This company is focused on growth, and we see meaningful opportunities on a variety of fronts,” he said.
“Asia remains the backbone of this company and our developments in Macau and Singapore are the center of our attention. We will always look for ways to reinvest in our properties and those communities. There are also potential development opportunities domestically, where we believe significant capital investment will provide a substantial benefit to those jurisdictions while also producing very strong returns for the company.”
“Our long-held strategy of reinvesting in our Asian operations and returning capital to our shareholders will be enhanced through this transaction.”
With an extra US$6.25 billion to play with, the key question now is how LVS will look to utilize its new war chest.
In a research note, Bernstein analysts Vitaly Umansky, Kelsey Zhu, Tianjiao Yu and Louis Li pointed out that Sands China’s US$2 billion transformation of Sands Cotai Central into The Londoner Macao is already fully financed, while it is unlikely LVS will be able to substantially increase its current 70% stake in its Macau-based subsidiary.
Unless Tokyo enters the IR race, Japan is also an unlikely suitor after LVS withdrew from the market in May 2020 due to concerns over tightening regulations.
And while some of the finds could be used for the company’s US$3.3 billion expansion of Marina Bay Sands in Singapore, the most likely new market for LVS could be Australia via acquisition of troubled casino operator Crown Resorts (as proposed by Inside Asian Gaming earlier this year).
Crown “could be a good fit for Sands in the long run,” Bernstein says. “The company is currently in turmoil following regulatory challenges following revelations of AML violations and controls problems. Several directors and executives (including the CEO) have resigned and the company is ripe for new ownership and management.
“However, Sands’ Macau and Singapore operations and its current junket relationships in Macau (although they are quickly shrinking) may create some issues. It is unclear at this time whether an acquisition of Crown could make sense.”
The recently released Bergin Report into Crown’s suitability to hold a New South Wales state casino license recommended banning Asian junkets, while regulators in Western Australia have already implemented a ban on the use of junkets as well as all “table games activity with patrons who are non-residents of Australia with whom Crown Perth has an arrangement to pay the patron a commission, or provide transport, accommodation, food, drink or entertainment, based on the patron’s turnover or otherwise calculated by reference to such play.”