Miriam Adelson’s $2B Sale of Sands Stock Won’t Affect Macau Unit

Posted on: November 30, 2023, 02:48h. 

Last updated on: December 1, 2023, 10:20h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Earlier this week, Dr. Miriam Adelson and the Miriam Adelson Trust announced a $2 billion sale of Las Vegas Sands (NYSE: LVS) stock, news that sent the stock careening lower. An analyst, however, says the transaction won’t have any adverse effects on the company’s Sands China unit.

Donald Trump Ron DeSantis Dr. Miriam Adelson Sheldon
Florida Gov. Ron DeSantis dines with Dr. Miriam Adelson in April at the Museum of Tolerance in Israel. Dr. Adelson’s $2 billion sale of Sands stock will have no impact on the company’s Macau operations, says an analyst. (Image: Axios)

Late Tuesday, Sands priced the offering at $44 per share, well below that day’s closing price of $47.66. That sent the stock tumbling on Wednesday on volume that was far higher than the daily average. While Adelson, the widow of Sands founder Sheldon Adelson, and her namesake trust are the largest LVS shareholders, she isn’t involved in day-to-day operations at the gaming company, a point highlighted by JPMorgan analyst DS Kim.

This should NOT have any impact on Sands China’s operation as Dr Miriam Adelson was NOT involved in the business nor held any position,” wrote Kim in a note to clients. “This is NOT the same as LVS selling the stake or doing a placement. In fact, LVS is actually re-purchasing the portion of these stakes.”

The delineation made there by Kim is important. Because not only did Sands pledge to buy back up to $250 million worth of the stock Adelson is selling, but had the company itself announced a $2 billion share sale, the subsequent impact to the share price would have been far worse. That’s because current investors would have been diluted by new shares coming to market. In the Adelson transaction, no new equity is being issued.

Adelson Sale No Comment on Macau Fundamentals

Currently, the Sands portfolio consists of Marina Bay Sands in Singapore and five integrated resorts in Macau, where Sands China is the largest operator.

Among U.S.-based gaming companies, it was Sands, under Sheldon Adelson’s leadership, that initially saw the vast opportunity in Macau when the special administrative region (SAR) opened to foreign competition two decades ago.

Today, the Chinese enclave has reclaimed the throne as the world’s top casino hub as measured by gross gaming revenue (GGR). And some Sands China venues there are among the most profitable integrated resorts in the world. Among U.S.-based nontechnology companies, few are as dependent on China for earnings and revenue as is Sands. Fortunately for investors, Miriam Adelson’s share sale isn’t a commentary on Macau’s future.

“So, this is a transaction by the widow of the founder of the parent-co of Sands China, which has zero implication for Macau’s fundamentals, in our view,” added Kim.

The analyst said that Macau concessionaires, including Sands China, should return to 85% of pre-coronavirus earnings before interest, taxes, depreciation, and amortization (EBITDA) in the current quarter.

Adelson Getting Into Basketball

As has been widely documented, Adelson is using proceeds from the share sale to buy a majority interest in the Dallas Mavericks.

That, coupled with LVS President and COO Patrick Dumont being her son-in-law and being involved in the transaction, has stirred speculation that the operator will renew its quest to bring casino gaming to Texas. That rumor is credible, because Mavericks owner Mark Cuban has clearly stated multiple times that he wants a casino hotel in the Dallas area, and that he’d partner with Sands on such a project.

Gaming expansion bills were defeated in the Texas legislature earlier this year and won’t be debated again until 2025. That’s because the legislature isn’t in session next year.