MGM investor beckons to China peers

Business | Victor Zhong and Reuters 8 Jan 2021

Victor Zhong and Reuters

Snow Lake Capital suggested MGM China (2282) introduce Chinese enterprises like Meituan (3690) and Sunac China (1918) as a possible 20 percent strategic investor after it raised its stake in MGM China.

In a letter to MGM Resorts International's board, the mainland investment management firm said that the new strategic investor will bring significant non-gaming resources to both MGM and Macau, which is a crucial factor to renew the gaming concession. The letter came as the Macau gaming license will be due to expire in mid-2022.

The firm said that such a move would give MGM Resorts financial flexibility and provide the company with enough capital to commit to its Osaka gaming-integrated resort project, reported Reuters.

At the same time, any company ready to partner with MGM would also benefit from a strategic investment in MGM China at a time when Macau could "possibly surpass Hong Kong and become the top destination for China's outbound tourism, given Hong Kong's recent struggles with protests and the pandemic," the letter said.

MGM Resorts said it remains committed to Macau and appreciates "continued constructive engagement" with MGM China's shareholders.

Such a step would also allow MGM to sweeten its offer for Entain Plc, an online focused operator that owns bookmaker Ladbrokes.

Snow Lake added its voice to a growing chorus of shareholders backing the potential tie-up with Entain, writing that "an acquisition of Entain Plc makes tremendous sense for MGM Resorts International as the United States online market represents a key long-term growth opportunity."

Snow Lake Capital stood as the largest public shareholder of MGM after it increased its shares from 6.87 percent to 7.51 percent on December 31.

Kenny Wen, wealth management strategist at Everbright Sun Hung Kai, believes that introducing a new investor does not help much in renewing its gaming license, but is more like a gimmick.

He saw no support for the gaming stock's price in the short term, given the epidemic is severe.

Meanwhile, Sands China (1928) announced chairman and chief executive Sheldon Adelson will take medical leave for lymphoma treatment. He will be replaced by Robert Goldstein, while Grant Chum Kwan Lock was appointed executive director.

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