Casino group Las Vegas Sands Corp is interested in merger and acquisition (M&A) activity in Asia, says its chairman and chief executive.
Sheldon Adelson (pictured in a file photo) was speaking on Wednesday on the first-quarter earnings call of the United States-based company – after it had announced a group net loss of US$51 million amid the coronavirus pandemic. The firm is also the parent of Macau casino operator Sands China Ltd, and also controls the Marina Bay Sands casino resort in Singapore.
“I am not going to give up developing integrated resorts. I am going to add on… to our strategic priorities,” Mr Adelson said when asked about possible merger and acquisition.
The entrepreneur had previously been on record saying he preferred to develop rather than acquire the assets of others.
Asian markets the group has previously looked at include South Korea, and Vietnam according to either reports or company commentary. The group has also expressed interest in new development in the freshly-liberalising Japan market.
But on Wednesday’s call Mr Adelson noted regarding merger and acquisition: “If we can find something in Asia, we will certainly like to do that.”
He noted that “Asia has the population most inclined to gamble”.
The group was “interested in M&A,” Mr Adelson affirmed. “One of the reasons is… we have the best balance sheet in the industry,” he stated, adding the firm expected markets in Asia to recover first, because of their previous experience of dealing with viral outbreaks.
The group said in its first-quarter earnings that it held unrestricted cash amounting to US$2.6 billion as of March 31.
The businessman stated his group was interested in acquiring “one or more operations”. “But of course the price has to be right,” he added.
Brokerage Sanford C. Bernstein Ltd said it was “not realistic in near term” to expect Las Vegas Sands to acquire further assets in Asia.
“Looking at Asia we do not see any tangible acquisition opportunity outside of Macau – but we believe a Macau acquisition is extremely unlikely,” stated the institution’s analysts. “Casinos in ASEAN [Association of Southeast Asian Nations] are not realistic due to regulatory issues and [South] Korea does not allow locals gaming (and we do not believe Sands would ever choose to have a property with no locals as economics generally do not work well),” they added.
Earlier on the earnings call, Las Vegas Sands’ president and chief operating officer Rob Goldstein commented on the possible end to travel restrictions regarding the Macau tourism market.
He stated: “We are hopeful it will be in May or June.” But it wouldn’t be a “flick of a switch” where suddenly things went back to how they were before the pandemic struck. “We are hoping first that the IVS [Individual Visit Scheme] is reinstated: that’s pivotal.”
Macau’s Chief Executive Ho Iat Seng said on Monday that the city’s government would ask China’s central government to increase beyond the current 49 places, the number of cities covered by the IVS, once the Covid-19 pandemic was controlled. That would represent the first such expansion in over a decade.
Mr Ho also said that once it was confirmed that the Covid-19 disease had been stopped, the authorities in Macau would ask the central government to consider restarting the IVS. He said the authorities might have more clarity regarding this matter by the end of April, depending on the efforts to contain the further spread of the pandemic.
Las Vegas Sands’ Mr Goldstein described a return of visitors from Macau’s neighbouring mainland province Guangdong as “pivotal” in itself.
He added: “Once that happens it opens the door for others [provinces] to follow.” But he added that “airlift” to Macau “may still be muted for a while”.
Though Mr Goldstein said that even if so-called “social distancing” measures were to be maintained as the tourists started to come back – such as limiting the numbers of players at tables – “the size of our operations” in Macau and their “scale” meant the firm had enough gaming space to accommodate that, meaning there should not be significant impact on earnings.
Las Vegas Sands’ management also emphasised that the suspension of the dividend programme was “temporary”, stating that further decisions about the topic would depend on business recovering. “We’ll reinstate the dividend as soon as we get back to earning some money,” said Mr Adelson.
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"The travel impediments [in mainland China] will lead to reduced visitation into Macau for the next few weeks at least, with Chinese New Year visitation being impacted"
Vitaly Umansky, Tianjiao Yu and Kelsey Zhu
Analysts at Sanford C. Bernstein Ltd