Sat, Mar 24, 2018 - Page 10 News List

Macau, Las Vegas gambling behemoths announce tie-up in billion-dollar deal

Bloomberg

Galaxy Entertainment Group Ltd (銀河娛樂) agreed to buy a stake in Wynn Resorts Ltd, in a surprise move linking two of the biggest operators in Macau and Las Vegas that could reshape the gaming landscape in the Chinese territory.

The investment comes as Steve Wynn separately sold his remaining 8 million shares in Wynn Resorts, eliminating one of his last ties to the casino company he founded after quitting last month amid sexual harassment allegations.

Wynn Resorts sold 5.3 million newly issued shares of common stock to Galaxy, giving the competing Macau casino operator an estimated 5 percent stake in the company, a statement said on Thursday.

The shares were sold at close to market price at US$175 each, for a total of about US$927.5 million.

“This is a unique opportunity to acquire an investment in a globally recognized entertainment corporation with exceptionally high-quality assets and a significant development pipeline,” Galaxy Entertainment Group vice chairman Francis Lui (呂耀東) said in a statement.

The agreement, linking the largest Macau operator with a major Las Vegas pioneer, could shake up Macau’s gaming industry at a pivotal time as the world’s biggest gaming hub unveils plans in coming months on how it will review and give out operating licenses.

The tie-up could be an opening for a local operator to win more of the US$33 billion gaming industry that has been overshadowed by US operators.

The sale of new shares to Galaxy, controlled by Hong Kong billionaire Lui Che-woo (呂志和), positions the company as a potential suitor if Wynn Resorts were up for sale.

“Over the longer run, Galaxy may be a potential acquirer of Wynn Macau and the initial purchase gives Galaxy a first bite at the company,” a Sanford C. Bernstein & Co note by analysts led by Vitaly Umansky said.

While he said that Galaxy might not want to buy all of Wynn Resorts, “a Galaxy acquisition of Wynn Macau assets would create the leading Macau gaming company.”

Galaxy’s investment in Wynn follows its expansion plans beyond Macau. It received a casino license with a local partner in the Philippines this month to build a US$500 million resort and is also looking at a potential opportunity to enter the Japanese market after the country legalized casino gambling.

Wynn Resorts plans to use the proceeds to repay a US$800 million loan it took out to settle a longstanding feud with Universal Entertainment Corp, one of its original investors.

Steve Wynn sold his remaining shares to two institutional investors who already hold Wynn Resorts stock, a spokesman said.

His shares also went for US$175 each, or US$1.4 billion. The transaction followed an earlier sale of 4.1 million shares, also announced on Thursday.

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