According to an analyst, the sale of Adelson’s shares will not affect Sands China.
Posted on: November 30, 2023, 02:48h.
The most recent update was made on November 30, 2023 at 03:53 AM.
Earlier this week, the Miriam Adelson Trust, led by Dr. Miriam Adelson, disclosed a $2 billion sale of Las Vegas Sands (NYSE: LVS) stock. This announcement caused the stock price to drop significantly. Despite this, an analyst believes that the sale will not have any negative impact on the company’s Sands China unit.
In April, Florida Governor Ron DeSantis had a meal with Dr. Miriam Adelson at the Museum of Tolerance in Israel. According to an analyst, the recent sale of Sands stock for $2 billion by Dr. Adelson will not affect the company’s operations in Macau. (Image: Axios)
On Tuesday evening, Sands announced the price of their offering at $44 per share, which was significantly lower than the closing price of $47.66 that day. As a result, the stock experienced a sharp decline on Wednesday, with trading volume well above the usual amount. Although Adelson and her namesake trust hold the majority of LVS shares as the largest shareholders, she is not actively involved in the company’s daily operations, as noted by JPMorgan analyst DS Kim.
According to a note sent to clients by Kim, the involvement of Dr. Miriam Adelson in the business and her lack of position should not affect Sands China’s operation. The recent actions taken by LVS, such as selling stakes or making placements, are not equivalent to the company’s current repurchase of these stakes.
Kim’s delineation holds significance as it not only involves Sands committing to repurchase $250 million in stocks from Adelson, but also avoids the potential negative effects on current investors had the company announced a $2 billion stock sale. Unlike the Adelson deal, there is no issuance of new equity.
Adelson did not comment on the fundamentals of the Macau fund.
At present, Sands has a portfolio that includes Marina Bay Sands in Singapore and five integrated resorts in Macau, with Sands China being the leading operator.
Sands, led by Sheldon Adelson, was the first among American gaming companies to recognize the potential in Macau when the SAR began allowing foreign competition twenty years ago.
Currently, the Chinese territory has regained its position as the leading gambling destination in terms of gross gaming revenue (GGR), with several of Sands China’s establishments ranking among the most lucrative integrated resorts globally. Among American non-tech businesses, Sands is one of the most reliant on China for profits and income. Fortunately, for stakeholders, Miriam Adelson’s recent selling of shares does not reflect on the future of Macau.
According to Kim, this transaction involves the widow of the founder of Sands China’s parent company and does not have any impact on Macau’s underlying factors in our opinion.
The analyst stated that Macau’s concessionaires, such as Sands China, are expected to reach 85% of their pre-coronavirus earnings before interest, taxes, depreciation, and amortization (EBITDA) in the present quarter.
Adelson Ventures into the World of Basketball.
It has been extensively recorded that Adelson is utilizing the profits from the stock sale to acquire a controlling stake in the Dallas Mavericks.
There are rumors that LVS President and COO Patrick Dumont, who is also the son-in-law of the company’s CEO, is involved in a transaction that may lead to the introduction of casino gaming in Texas. This speculation is supported by the fact that Dallas Mavericks owner Mark Cuban has expressed interest in having a casino hotel in the Dallas region and has mentioned partnering with Sands for this venture.
Legislative proposals for gaming expansion were unsuccessful in the Texas legislature earlier this year and will not be revisited until 2025 due to the legislature’s recess in the upcoming year.
