In a recent report it was declared that MGM Resorts International will be taking control of its Macau casino, a joint venture with the Ho dynasty.
This will be done by acquiring the shares of Pansy Ho, daughter of Stanley Ho. Such an acquisition will raise MGM’s share in the casino to 51 percent.
The casino family of Ho has been in the news for the past year as a huge spat began among Stanley Ho, the head of the dynasty, and the rest of the family regarding the parting of assets. The feud ended with Pansy and some other members of the family getting controlling interest in SJM Holdings Ltd. It is this share that Pansy has decided to sell to MGM.
The proceedings from the sale will be remitted to an entity and Pansy Ho will use the same to buy convertible senior notes of MGM.
Announcement of the imminent purchase led to a surge in share prices of MGM by eight percent. But, initial talks of the purchase a few months back was dropped by MGM when the Stanley Ho scandal broke out and Ho was suspected to finance organized crime.
MGM Resorts International is the second largest gaming company in the world and has its roots in Nevada. The company began its life only in year 2000. The company soon grew to own some of the most famous casinos in Las Vegas including the Bellagio, The MGM Grand, The Mirage, Monte Carlo, and Luxor. Its hotel cum casino, MGM Grand, opened in Macau in the year 2007. The company had 50 percent share in the venture then.
The purchase of this share will give MGM full control of the casino and its operations. It will further be able to consolidate the Macau casino’s operations in its own books. Macau is the only place in China where gambling is legal and therefore the Chinese as well as people from around the world visit the island to enjoy its gambling facilities. The casinos in Macau are considered to be four times more profitable than those in Las Vegas. This is the reason MGM and other casino companies from the United States of America are trying to gain business relations in Macau either through joint ventures or directly. MGM spokesperson says that they aim to list the company in the Hong Kong Stock Exchange.
The listing will be sought in the name of MGM China Holding Company.
Ho is expected to get 29 percent stake in the company. The company expects to complete its IPO (Initial Public Offering) by 30th June 2011.
The deal with Ho is expected to generate net proceeds of $300 million for the company, which can be used to complete the IPO. This would make the circle whole in Macau as MGM would be the last of the six companies who have gambling license in Macau to go public.
At present, MGM officials are keeping quite on the subject and have only confirmed the deal with Pansy Ho. This is mainly due to the “quiet period” warranted by IPO.