Operator News
US – MGM in talks to buy Sands Bethlehem
By Phil - 6 March 2017
MGM Resorts is believed to be in discussions to buy Sands Casino Resort Bethlehem from Las Vegas Sands.
MGM has been expanding the company’s footprint in the East. The operator has recently opened MGM National Harbor in Maryland and is building another in Springfield, Massachusetts. It is also a partner in the Borgata, Atlantic City’s top earning casino. It also own casinos in Las Vegas, Mississippi and Detroit.
Buying the Bethlehem casino would give it a foothold in what has become the second top revenue earning casino state in the US. Pennsylvania Gaming Control Board spokesman Richard McGarvey confirmed some discussions were in place but could not confirm who the suitor was until the board had received an official filing.
MGM stated: “We have no comment on this or any other merger and acquisition activity.”
“Las Vegas Sands is regularly approached about potential interest in various assets. The company has no announcement to make at this time,” said Ron Reese, Las Vegas Sands spokesman. “As always, we thank our dedicated team members for their hard work and professionalism.”
However, reports suggest that Sands Bethlehem President Mark Juliano has emailed casino employees to notify them of an interested buyer without naming them.
“The sale is not imminent, and there is a lot of work that still needs to be done before a sale is final,” Sands Bethlehem CEO Mark Juliano said in the email.
State Senator Lisa Boscola, meanwhile confimred that she had heard the bidder was MGM and that the offer was ‘really, really good’ ‘an offer they couldn’t refuse.’
Analysts believe the deal would be worth $1bn.
Union Gaming analyst John Decree explained the cost would be roughly nine times the casino’s annual EBITDA, which in 2016 was $136m, giving a sell on value of $1.2bn.
He added: “The sale of Sands seems to come up every six months, but this is a casino with a squeaky clean balance sheet that isn’t going to sell to a low-ball offer. That casino will fetch north of $1bn. And if they don’t get their number, they probably won’t let it go.”
Adam Trivison, an analyst with Gabelli & Co., added: “MGM uses these regional casinos to build relationships with players they can get into their Las Vegas casinos. Sands fits that model perfectly.”
In November, Sands announced a US$90m renovation at the eight year old property. Construction was expected to begin in the first quarter of 2017 with the expansion adding a new gaming floor and more than 1,000 new gaming seats, along with additional restaurant space, public restrooms and additional back of house facilities. The footprint expansion is approximately 59,200 square feet and a total gross floor area expansion of almost 100,000 square feet.
