Sands Could Pursue Crown Acquisition, Restore Dividend with Venetian Cash, Says Research Firm

By | March 4, 2021

Las Vegas Sands (NYSE:LVS) may consider an acquisition of beleaguered Crown Resorts with proceeds from the sale of Venetian Resort and Sands Expo and Convention Center, according Bernstein analysts.

LVS Crown
Venetian Las Vegas. A research firm says Sands could pursue Crown Resorts with cash from the sale of Strip assets. (Image: Bloomberg)

The company said yesterday it’s selling those assets to Apollo Global Management and VICI Properties for $6.25 billion, effectively eliminating its visible presence in the city with which it shares a name. Sands’ decision to part with the Strip properties is also stoking speculation about how the largest gaming operator by market value will deploy the cash.

Crown Resorts could be a good fit for Sands in the long run. The company is currently in turmoil following regulatory challenges following revelations of anti-money laundering violations and control problems,” said Bernstein analysts, led by Vitaly Umansky. “Several directors (including the CEO) have resigned and the company is ripe for new ownership and management.”

The Australian gaming company is grappling with a spate of departures from its board as it contends with intensifying regulatory scrutiny in its home country. Last month, Crown was found unsuitable to run the $1.7 billion Crown Sydney integrated resort by regulators in New South Wales (NSW) and officials in other Australian states are now examining the operator’s suitability to hold gaming permits.

Something to LVS/Crown Talk

Bernstein’s Umansky acknowledges “it is unclear at this time whether an acquisition of Crown could make sense.” However, there are reasons why the rumor has some life.

The late Sheldon Adelson and James Packer were spotted together at a New Year’s Eve party in the French Caribbean, leading to chatter the latter could sell his 36 percent Crown stake to LVS. On an earnings conference call with analysts last year, Adelson acknowledged Sands may consider acquisitions in the Asia-Pacific region. He died in January of complications stemming from non-Hodgkin’s lymphoma.

Additionally, Crown’s regulatory woes could make it possible for a suitor to absorb the company without a sizable premium. It has a market capitalization of $5.25 billion — just a fraction of the $50.24 billion LVS is worth.

Packer’s gaming company isn’t a stranger to acquisition chatter. Two years ago, Wynn Resorts was in buyout discussions with Crown, but the Las Vegas-based company scrapped those talks after Crown prematurely leaked the news to media outlets.

Potentially fueling acquisition rumors, Crown or otherwise, is that LVS doesn’t need to direct cash from the Las Vegas sale to Macau or Marina Bay Sands (MBS) in Singapore because the company already committed capital for enhancements in those regions, according to Bernstein.

Dividend Resumption, Other Odds and Ends

Bernstein is among several research firms noting it’s possible LVS will use some of the cash from the Venetian sale to restart its dividend. The payout was suspended last April due to the COVID-19 pandemic – a move that saved the company over $2 billion.

“We expect the dividend to resume — initially at a lower level than 2019 — in 2022 under the assumption that Macau and Singapore would get back to more normal business levels,” said the Bernstein analysts.

With the sale of Venetian and Sands Convention Center, LVS will have no US operations — assuming it doesn’t open an integrated resort in New York or Texas — but the company is planning to maintain its Las Vegas headquarters and its listing on the New York Stock Exchange.

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