Posted on: September 10, 2024, 04:09h.
Last updated on: September 10, 2024, 04:09h.
Las Vegas Sands (NYSE:LVS) may allocate up to $103 million to slightly enhance its ownership in Sands China to nearly 72%.
The announcement was disclosed in a regulatory filing with the Hong Kong Stock Exchange (HKSE). A group known as Venetian Venture Development Intermediate II and a financial services company intend to acquire the Sands China shares. Based on Sands China’s closing price on Sept. 9, $103 million represents 59,612,518 shares, or 0.74% of the company’s freely floating stock.
The planned acquisitions by LVS come after the company revealed last December that it would purchase $243.1 million worth of Sands China shares through Venetian Venture Development Intermediate II. This raised the parent company’s ownership in the Macau casino operator from 70% to 71.19%.
Sands China is the leading casino operator in Macau, operating five integrated resorts in the only Chinese territory where gambling is allowed.
LVS Could Further Increase Sands China Stake
The news that Las Vegas Sands is boosting its stake in its Macau unit is not unexpected, as it did so last year, and some analysts believe the goal is to eventually surpass 75%, without acquiring minority investors.
In a recent report to clients, Seaport Research Partners analyst Vitaly Umansky stated that LVS might increase its ownership of the Macau entity to 75% or more in the future, but reiterated that the US-based parent company would not purchase the entirety of Sands China and prefers to keep the listing on the HKSE.
Having the listing is crucial as it allows local investors in Hong Kong and mainland China to access the stock, demonstrating LVS’s commitment to Macau and China, which could be seen favorably by Chinese regulators.
In his August note, Umansky also mentioned that Sands China is unlikely to resume dividend payments before next year, despite LVS resuming its quarterly payout 14 months ago. Currently, Sands China is one of three Macau operators that do not pay dividends.
Another Reason Sands China News Is Expected
Another reason why LVS increasing its equity holdings in Sands China is unsurprising is because the company informed investors that such actions were possible when it sold the Venetian and Sands Expo and Convention Center on the Las Vegas Strip over three years ago.
This deal generated $6.25 billion in gross proceeds, with a portion of the net amount used to improve Sands’ properties in Macau and Marina Bay Sands in Singapore. The company hinted to shareholders that some of the funds could be used to boost its ownership in Sands China.
Private equity firm Apollo Global Management now operates the Venetian, while VICI Properties owns the property assets of the integrated resort and convention center.