Sands Had Agreement to Acquire Crown Prior to Sheldon Adelson Death

Posted on: December 20, 2021, 12:27h. 

Last updated on: December 20, 2021, 06:33h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Las Vegas Sands (NYSE:LVS) reportedly had an agreement in place to acquire embattled Crown Resorts prior to the death of Sheldon Adelson. That proposal could be revisited as the Australian casino operator mulls other offers.

Crown Resorts
James Packer, Crown Resorts’ largest shareholder, seen in 2018. Las Vegas Sands could make another acquisition offer for his company. (Image: Ted Aljibe/Agence France-Presse)

Adelson, chairman and chief executive officer of the world’s largest gaming company by market capitalization, passed away in January of this year at 87 of complications from non-Hodgkin’s lymphoma.

Adelson and Crown boss James Packer had a deal ready earlier this year prior to the former’s passing, according to reports from The Australian. There might be something to that speculation, because the two gaming moguls were spotted together last New Year’s Eve in the French Riviera, stoking takeover chatter.

The publication doesn’t mention possible prices discussed by Adelson and Packer. But Crown currently has an offer on the table from private equity giant Blackstone (NYSE:BX) valuing the Aussie casino company at $8.90 a share. However, Packer, who controls 37 percent of the operator, believes his company is worth closer to $10.70 a share.

Speculation is also intensifying that Crown rival Star Entertainment is waiting in the wings to make another offer in a bid to create an Aussie gaming behemoth.

Makes Sense for Sands

Following the sale of the Venetian and Palazzo integrated resort complex and Sands Expo and Convention Center earlier this year — and the divestment of a gaming venue in Pennsylvania in 2019 — Sands has no US assets.

That means the operator is entirely dependent (at least for now) on its five integrated resorts in Macau and Marina Bay Sands (MBS) in Singapore. In normal operating environments, those are among the most plum gaming assets in the world. However, the last two years have been anything but normal, as the coronavirus pandemic is limiting travel throughout Asia and Macau authorities float tighter regulations on operators.

While LVS has no shortage of well-known defenders in the investment community, the shares are down 40.54 percent year-to-date. That could be an impetus for the operator to broaden its geographic profile. That objective would be met by acquiring Crown.

Like MBS, Crown would maintain Sands’ exposure to devoted Chinese gamblers while preventing the operator from having to deal directly with regulators in the world’s second-largest economy.

At a time when Beijing is ratcheting up regulations across a slew of sectors and industries, and as geopolitical relations between the US and China remain frigid, there are obvious benefits for Sands in reducing Macau dependency.

Wynn Could Get in Mix, Too

The Australian also speculates that Wynn Resorts (NASDAQ:WYNN), which scrapped a bid to acquire Crown in 2019, could also enter the fray.

Like Sands, Wynn is heavily dependent on Macau, and executive change at the latter has analysts saying it’s possible the Encore operator could be a player in gaming industry consolidation. However, it’s not yet clear if Wynn is mulling another run at Crown.

Crown’s Australian assets consist of Crown Perth, Barangaroo, and Crown Melbourne. The Melbourne venue is the plush member of the trio and is considered one of the top-flight integrated resorts in the Asia-Pacific region.