The Sands Bethlehem Deal: Likely A Positive For Las Vegas Sands, MGM Resorts, MGM Properties

Most of the time when a company sells an asset to another company, the market rewards the perceived “winner” of the deal and punishes the loser. On rare occasion, the market will see a transaction as a win-win for both parties involved.

According to Deutsche Bank analyst Carlo Santarelli, news that Las Vegas Sands Corp. LVS may be selling its Sands Bethlehem resort to MGM Resorts International MGM could be a win-win-win for Sands, MGM and MGM Growth Properties LLC MGP.

Asset Sale

Santarelli compares the deal to a similar deal last year in which MGM purchased Boyd Gaming Corporation BYD’s stake in the Borgata resort.

“For MGM, the transaction would expand a northeast presence that has grown significantly over the past year, while MGP potentially benefits from a new rent stream,” Santarelli explained.

He added that Las Vega Sands generated a significant ROIC in the Bethlehem resort and its sale would strengthen the company’s balance sheet as it considers a possible boost to its capital return plan.

For Sands, Deutsche Bank estimates the sale could generate proceeds of around $1.2 billion. For MGM, the firm estimates the property would add between $0.55 and $0.81 in present equity value.

Deutsche Bank maintains a Buy rating on MGM Resorts and Hold ratings on MGM Growth Properties and Las Vegas Sands.

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