MGM Still Won’t Confirm Sands Bethlehem Buy
Sources say deal is worth around $1.3 billion
Las Vegas Sands Corporation has reached an “agreement in principle” to sell its Sands Casino Resort Bethlehem, one of the most profitable gaming properties in Pennsylvania, to MGM Resorts International for around $1.3 billion, according to unnamed sources quoted by the Allentown Morning Call.
In what would be the largest deal since Pennsylvania opened its first casino in 2006, the sale would expand MGM’s Eastern holdings—which have been growing over the past several years through acquisitions in three states. In just the past two years, the operator bought out Boyd Gaming’s half ownership of the Borgata in Atlantic City, opened MGM National Harbor in Maryland, and secured the license for MGM Springfield in Massachusetts, due to open in 2018.
The newspaper reported that its sources have confirmed the sale is “imminent,” although officials of Sands Casino and MGM have declined to comment on the pending sale. The sources say the two parties have entered a due diligence phase, during which time neither side will comment publicly.
“Las Vegas Sands is regularly approached about potential interest in various assets,” Las Vegas Sands spokesman Ron Reese said in a statement. “The company has no announcement to make at this time. As always, we thank our dedicated team members for their hard work and professionalism.”
Officials at MGM reiterated a statement released two weeks ago stating pretty much the same thing—MGM is always looking for opportunities, but there is no imminent news on a possible purchase of the Bethlehem casino. “Our statement from last week still holds,” said Mary Hynes, MGM spokeswoman. “We have no comment on this or any other merger and acquisition activity.”
Sands Bethlehem has rivaled the Parx casino near Philadelphia as the most successful gaming property in the state. The casino has had particular success in the table game area, busing in Asian high rollers from New York City. The property is one of the few in the state offering a hotel, and LVS has added convention and meeting space and a retail attraction since opening the casino on the brownfield site of the defunct Bethlehem Steel plant.
Last month, the Sands became the first-ever casino operated by LVS to sign a contract with a union, when the property’s security guards became the first to crack LVS Chairman Sheldon Adelson’s longstanding anti-union stance.
News of an imminent sale was greeted positively by analysts, who have speculated MGM could buy the property and transfer it to is real estate investment trust, MGM Growth Properties, and then lease the property from MGP.
“We believe a Sands Bethlehem sale, which would likely include MGP, could also be beneficial for all involved,” Carlo Santarelli, Deutsche Bank Securities Gaming and Leisure managing director, wrote in a six-page analysis. “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. LVS sheds an asset which has already produced a significant (return on invested capital) and strengthens the capital return potential story.”
Bethlehem Mayor Robert Donchez was also positive on a sale to MGM in an interview with the Morning Call. “We’ve considered Sands a good corporate citizen, but this sale could be a good opportunity,” Donchez said. “There has been some frustration in getting Sands to put some focus on the rest of the property. The buyer might be more willing to consider developing it, or at least selling it off to someone who will.”
Sands’ master plan included an industrial museum, public plazas, concert venues and other attractions in the remaining buildings of the former steel mill.