Reports this week that Las Vegas Sands (LVS) supremo Sheldon Adelson and Crown Resorts’ biggest shareholder James Packer moored their superyachts alongside one another in the French Caribbean on New Year’s Eve have sent the global gaming gossip network into overdrive.
Coming less than a month out from Commissioner Patricia Bergin’s highly anticipated report into whether Crown is deemed suitable to retain its New South Wales state casino license, the conclusion drawn by some observers is that Adelson and Packer may well have been discussing a deal for Sands to buy into, or even acquire, the troubled Australian operator.
Whether or not such an intriguing transaction eventuates remains to be seen, but purely from a business standpoint it could well prove a match made in heaven.
Certainly there appears to be motivation on both sides to pursue such a deal. Remember it was less than two years ago that Crown found itself in talks with Adelson’s long-time Las Vegas competitor, Wynn Resorts, over a potential takeover deal valued at the time at around AU$10 billion (US$7.7 billion). Wynn ended negotiations after the story was leaked to the press, but Crown’s former partner in Macau, Melco Resorts & Entertainment, wasted no time in seizing the opportunity when it reached a deal to purchase 19.99% of the Australian casino giant directly from Packer for AU$1.76 billion (US$1.35 billion).
As we now know, that Melco deal – long since terminated – became one of the key focal points of the NSW Independent Gaming and Liquor Authority inquiry that has placed Crown’s casino licenses in NSW, Victoria and Western Australia in jeopardy.
While Commissioner Bergin’s report isn’t due for another few weeks, one possible outcome could be a requirement for Packer to sell down his stake in Crown, either partially or in full, in which case a fellow industry casino mogul like Adelson could be seen by Packer as some sort of white knight.
Adelson, too, may well have inadvertently forecast this very opportunity last April when he told analysts during an earnings call that LVS was actively watching for merger and acquisition opportunities in Asia.
“But of course, the price has to be right,” he said at the time. Could Adelson finally have his wish?
Last April, after acquiring an initial 9.99% stake in Crown directly from Packer for around US$575 million 10 months earlier, Melco Resorts sold off its interest to American multinational private equity and hedge fund giant The Blackstone Group for just US$360 million, representing a near 40% discount on its original purchase price. Should Commissioner Bergin force Packer into a hurried sale, any similar sort of deal might be just too good for Adelson to refuse.
From an LVS perspective, there is a lot to like about Crown Resorts. A well established and, for the most part, highly respected brand in Australia over the past 25 years, the company would provide another leg up into the Asia-Pacific market in a similar time zone to the company’s extensive assets in Macau and Singapore.
It doesn’t hurt that many of Asia’s leading gaming and hospitality executives have been sourced from Australia, among them none other than Andrew MacDonald – the former Crown Resorts strategist now based in Singapore as LVS’ Corporate SVP and Chief Casino Officer.
Crown also exists in a highly-regulated market – as it is discovering all too well right now – which can only be viewed favorably should LVS later resurrect its interest in tightly governed opportunities such as Japan.
Which brings us back to The Blackstone Group. On the one hand Blackstone, which has been aggressively expanding its casino investment portfolio in recent years including the purchase of the MGM Grand and Bellagio real estate from MGM Resorts in January 2020, may be looking to beat LVS to the punch. But on the other it may see LVS as the perfect partner in Australia, not only to step straight into a casino operations role should Packer & Co vacate its buildings but also to give comfort to US regulators back home.
Right now, the Packer-Adelson story is only one of ships passing in the night. But cast your net wide enough and sooner or later you’re bound to catch a big fish.