Las Vegas Sands Boosts Sands China Stake

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Las Vegas Sands Corp (LVS), the parent company of Macau casino operator Sands China Ltd, has expressed its intention to boost its ownership in the subsidiary by approximately 1.19%. Presently holding around 70% of the issued share capital of Sands China, LVS aims to reinforce its position through a share purchase transaction.

Taking More Control

According to a filing on Tuesday, Venetian Venture Development Intermediate II, the immediate controlling shareholder of Sands China and an indirect wholly-owned subsidiary of LVS, has reached an agreement for a share purchase transaction with a financial institution. As per the deal, Venetian Venture is set to pay up to HKD1.95 billion (roughly US$250.0 million) to acquire Sands China shares.

Based on Tuesday's closing price of HKD20.20 per share, this amount translates to approximately 96,600,247 shares, representing about 1.19% of Sands China's total issued shares, as outlined in the filing.

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LVS didn't explain if there was a specific reason for the purchase or if it was simply an attempt to capitalize on Sands China's strength. However, it could be an effort to boost investor confidence. Casino operators in Macau have watched as their stock prices have slipped, despite record revenue gains. The share purchase may be a tactic to entice other investors to follow suit.

A Good Move for Sands

JP Morgan Securities (Asia Pacific) Ltd, in response to Sands China's announcement, issued a memo about the purchase. The brokerage characterized this development as significantly positive for Sands China and marginally positive for its peers, emphasizing the signal of strong confidence and commitment from management, crucial for stabilizing recent bearish investment sentiment.

The memo also highlighted that the planned investment of around $250 million is not negligible concerning the company's float. It represents 6.5 days' worth of Sands China trading value.

In mid-October, LVS unveiled a $2-billion stock repurchase program during its third-quarter earnings call. Patrick Dumont, the group's president and chief operating officer, emphasized a preference for stock repurchases over dividends as a means of returning value to shareholders.

In late November, LVS reiterated its commitment to repurchase up to $250 million of its shares, with Miriam Adelson, the largest stockholder, reportedly set to sell shares. Adelson, widow of the late LVS founder Sheldon Adelson, is also in the process of acquiring a majority stake in the NBA's Dallas Mavericks for $3.6 billion.