Las Vegas Sands to Modestly Increase Sands China Stake

Posted on: September 10, 2024, 04:09h. 

Last updated on: September 11, 2024, 10:30h.

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

Las Vegas Sands (NYSE: LVS) could spend as much as $103 million to slightly increase its stake in Sands China to close to 72%.

Las Vegas Sands
The Sands China’s Parisian Macau. Parent Las Vegas Sands is planning to slightly increase its stake in its China unit. (Image: YouTube)

The announcement was made in a regulatory filing with the Hong Kong Stock Exchange (HKSE). An entity known as Venetian Venture Development Intermediate II and a financial services firm plan to purchase the Sands China equity. Based on Sands China’s September 9 closing price, $103 million represents 59,612,518 shares or 0.74% of the gaming company’s freely floating stock.

The planned purchases by LVS come after the gaming company said last December it would buy $243.1 million worth of Sands China equity via Venetian Venture Development Intermediate II. That took the parent company’s stake in the Macau casino operator to 71.19% from 70%.

Sands China is the largest casino operator in Macau, running five integrated resorts in the lone Chinese territory where gaming is permitted.

LVS Could Further Boost Sands China Stake

News that Las Vegas Sands is upping its interest in its Macau unit isn’t surprising because it did so last year. Some analysts believe LVS’ plan is to eventually take that percentage to north of 75%, but not ultimately buy out minority investors.

In a report to clients last month, Seaport Research Partners analyst Vitaly Umansky said LVS could eventually take its ownership of the Macau entity to 75% or more, but he added that the US-based parent won’t buy the entirety of Sands China, and that it wants to keep the listing on the HKSE.

That listing is important because it allows local retail investors and professional market participants in Hong Kong and mainland China to access the stock. In turn, that listing shows commitment to Macau and China, which can be viewed as a positive among Chinese regulators.

In his August note, Umansky added that Sands China is unlikely to restart its dividend before next year although it’s been 14 months since LVS resumed its quarterly payout. Sands China is one of three Macau operators that doesn’t currently pay a dividend.

Another Reason the Sands China News Isn’t Surprising

There’s another reason why it’s not surprising that LVS is again upping its equity holdings in Sand China. The company told investors such moves were possible when it sold Venetian and Sands Expo and Convention Center on the Las Vegas Strip more than three years ago.

That transaction resulted in $6.25 billion in gross proceeds and while significant portions of the net sum were used by Sands to enhance its Macau properties and Marina Bay Sands in Singapore, the company telegraphed to shareholders that some of the cash could be used to boost its Sands China ownership.

Private equity giant Apollo Global Management now operates the Venetian while VICI Properties owns the property assets of the integrated resort and the convention center.