By Farah Master
HONG KONG (Reuters) - Sands China (OTC:SCHYY) Ltd's adjustment to life after the death of billionaire founder Sheldon Adelson, coming a year before the firm's gaming licence expires, could open up opportunities for Chinese investors to acquire a stake, industry executives said.
Without the larger-than-life visionary at the helm, the firm may be more willing to sell a stake to curry favour with China's government, or suitors may take advantage of his absence to buy a degree of control without opposition, executives told Reuters.
Adelson, who died on Jan. 11 aged 87, was widely credited with helping transform the Chinese territory of Macau from a den of hardcore gambling parlours into a centre of luxury resorts and convention centres with revenue that now dwarfs that of Las Vegas, home of his U.S. flagship Las Vegas Sands (NYSE:LVS) Corp.
Yet gaming licences for Macau's six casino operators, including Sands China, are set to expire in 2022, and the government has yet to detail the rebidding process.
"This presents a window of opportunity for Chinese parties to come in and take a strategic stake in the company," said Ben Lee, founder of Macau gaming consultancy IGamiX.
Having a Chinese partner would improve Sands China's chance of a new concession, he said, particularly with the removal of Adelson's link to U.S. President Donald Trump, who he bankrolled and had regular contact with during Trump's anti-China term.
Parent Las Vegas Sands earns the bulk of its revenue from Asian properties, including the Venetian and Parisian in Macau and Marina Bay Sands in Singapore. The casino operator is due to open British-themed resort Londoner in Macau in February.
Sands did not immediately respond to requests for comment.
BEIJING DECISION
Any decision on a Chinese firm buying a meaningful stake in Sands China would not be made in Las Vegas or Macau but by authorities in Beijing, said Matthew Ossolinski, chairman of Ossolinski Holdings, an investor in Las Vegas Sands since 2008.
"Increased Chinese ownership in any of the large operators makes sense for political reasons and could be a net positive for existing shareholders," he said.
In January, MGM China (OTC:MCHVY) Holdings Ltd shareholder Snow Lake Capital urged MGM Resorts (NYSE:MGM) International to sell 20% of the Macau casino operator to a Chinese strategic partner to help secure its local casino licence.
In an open letter, Snow Lake said markets already reflected licence renewal concern for U.S.-owned Macau operators through trading performance and valuation - citing the high profitability yet low valuation of market leader Sands China.
DIVERSIFICATION PRICE
Casino operators are trying to ensure they stay on the right side of authorities, such as through hiring more local staff and supporting patriotic education initiatives.
Heeding government calls to help diversify Macau's gaming-dependent economy, Sands China built the territory's largest convention centre and exhibition space, entertainment theatres and around 13,000 hotel rooms.
Adding a Chinese partner would improve Sands China's licence chances and also boost its marketing ability in mainland China, said Anthony Lawrance, managing director of consultancy Greater Bay Insight.
"It would help for what comes next in Macau after the licences are awarded: access to new land and opportunities in (the mainland city of) Hengqin."
Still, risks for potential suitors include legal battles relating to the opaque process through which Sands China was awarded its Macau casino licence in the early 2000s.
In one case going to trial in June, former partner Asian American, headed by Taiwanese businessman Marshall Hao, is seeking $12 billion to compensate for lost profit from 2004 to 2020 after Sands China opted to change partner.