MGM Reportedly Mulled Genting Singapore Acquisition

Posted on: July 14, 2022, 04:35h. 

Last updated on: July 14, 2022, 04:56h.

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

Genting Singapore could be on the auction block, and the gaming company is reportedly attracting interest from some of the industry’s heavy hitters, including MGM Resorts International (NYSE:MGM).

Genting Singapore
An entry to Resorts World Sentosa. MGM reportedly talked to Genting Singapore about acquiring the venue. (Image: Genting Singapore)

Citing unidentified sources familiar with the matter, a Bloomberg article published earlier today reports the Bellagio operator held talks with the Lim family. They control the sprawling Genting empire. Genting Singapore operates Resorts World Sentosa — one of two integrated resorts in the city-state. The other is Marina Bay Sands, which is owned by Las Vegas Sands (NYSE:LVS).

The sources cited by Bloomberg say that talks between MGM and the Lims didn’t produce a pact. The story added that other, unnamed suitors are in early-stage discussions about acquiring the Singapore casino-resort.

Genting Singapore is a unit of Genting Berhad, a Malaysian conglomerate that owns and operates casinos in the Bahamas, Malaysia, the Philippines, Singapore, and the US, among other business interests. The company’s US venues are Resorts World Las Vegas, Resorts World Catskills, and Resorts World New York City. The Lims own 53% of the Singapore venue.

Genting Singapore Desirable for MGM

For any operator, Genting Singapore is a potentially coveted venue. That’s because, relative to other Asian gaming markets, such as Macau, the city-state is learning to deal with COVID-19 and is more open to international tourists than other countries in the region.

Additionally, the duopoly in Singapore is a favorable trait as well. Genting and Sands have a multi-decade agreement with the government there that limits the amount of gaming properties to the existing two. That means a prospective buyer of the Genting venue only needs to compete with Marina Bay Sands.

As for affordability, Genting Singapore’s market value is $6.4 billion, making it easily affordable for any number of suitors, including casino operators and private equity companies. For its part, MGM had $3.21 billion in cash on hand at the end of the first quarter, according to MacroTrends. The Mandalay Bay operator previously offered $11.06 billion for Entain, indicating it has some appetite for large-scale acquisitions.

Adding Singapore to its portfolio would offset some of the risk MGM is dealing with in Macau, where casinos are again temporarily shuttered because of an outbreak of COVID-19 cases. The company owns almost 56% of MGM China, which runs two Macau venues.

Other Potential Suitors for Genting Singapore

As noted above, the Bloomberg article doesn’t mention other companies by name that are mulling bids for Genting Singapore. Nor is it clear where things stand with MGM.

By process of deduction, Las Vegas Sands is out because of its established Singapore footprint. If history is an accurate guide, Wynn Resorts (NASDAQ:WYNN) could be an ideal suitor for Genting Singapore. In 2011, founder Steve Wynn said he’s “dying” to build a gaming venue in Singapore.

He’s no longer with the company. But the city-state could be an attractive destination for Wynn Resorts, as it looks to decrease its dependence on its two Macau properties.

Owing to its debt burden and focus on the US, Caesars Entertainment (NASDAQ:CZR) makes for an unlikely buyer of Genting Singapore. However, several cash-rich, gaming-asset-hungry private equity companies can easily afford to purchase the property.