MGM Resorts to increase stake in MGM China

MGM Resorts has announced it has entered into a transaction to acquire 188.1 million shares of MGM China from businesswoman Pansy Ho.

The transaction will see MGM Resorts own 56 percent of MGM China (up from 51 percent), with Ms Ho’s stake in MGM China down to 22.5 percent (from 27.4 percent).

“MGM Resorts is committed to the long term growth of Macau as a premier international tourism destination and we are pleased that we can build upon our longstanding relationship with Pansy to further work toward our mutual interests,” said Jim Murren, Chairman and chief executive officer of MGM Resorts in a statement.

“Together, we believe in the future of the Macau marketplace and are confident in the success of MGM China as we expand into Cotai next year.”

The transactions were generally regarded as positive by analysts.

“From one perspective the transaction is viewed as positive for MGM China as large controlling insider is acquiring a larger stake,” said Bernstein in a note on Tuesday.

“We view the deal as a “buy low, sell high” scenario that could be yet another signal that Macau has bottomed,” said Union Gaming.

At the same time Bernstein said the sell down from Ms. Ho could be seen as slightly negative “as it may signal the beginning of a long-term sell down of her position in the company.”

Ms. Ho has also announced she has entered into an agreement to acquire 4 million shares of MGM Resorts stock at $25.00 per share from Tracinda Corporation. Upon completion of these transactions, Ms. Ho would own approximately 4.8 percent of the outstanding common stock of MGM Resorts.  

“We continue to execute on value accretive transactions with the long term benefits in mind as MGM Resorts is increasing its stake in MGM China in a financially prudent manner,” added Mr. Murren.

The transaction is subject to customary closing conditions and is expected to be completed during 16Q3.