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Are MGM Set to Launch Takeover Bid for Genting Singapore?

Resort World SentosaOne of the major casino operators in Asia is reportedly the target of takeover activity from a number of key industry players.

Bloomberg has reported that Genting Singapore has caught the eye of MGM Resorts as a potential investment opportunity, in a move that would re-shape the casino sector in one of Asia’s most popular jurisdictions.

According to the media outlet, representatives from MGM contacted Genting Singapore’s owners, the Lim family, to try and strike a deal, although sources revealed that no formal offer or progress was made.

However, it’s entirely possible that MGM – or one of Genting’s other suitors – will make a more concrete bid as punters flock back to Singapore with the pandemic situation now on the mend there.

Curiously, Genting only own 53% of the shares of Genting Singapore – a controlling stake, of course, but not sizable enough to put off suitors seeking a sizable slice of the pie.

And Genting is no stranger to selling of their prized assets. They sold their stake in Norwegian Cruise Lines in 2018, raising more than $1 billion in capital (£830 million), and that came a year after they sold their shares in Australian casino The Star for $182 million (about £150 million).

It has also been suggested that Genting holds considerable debt – around £4 billion’s worth – from their stake in Resorts World Las Vegas, which would make selling their Singapore division all the more appealing.

The news of MGM’s possible takeover saw Genting’s share price rise by a whopping 9%, however that has since shrunk after reports suggested any possible deal was a long way off.

Opportunities & Threats

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Parts of Asia have, it goes without saying, been decimated by the global health crisis, and the situation in some regions – particularly Macau – has been dire.

So much so, Macau’s worst run has hit this July – forcing the closure of casinos for 12 days.

But Singapore has fared rather better, thanks to a robust medical program, and as of January 1 this year some 84% of the population there had had at least one dose of the jab.

That has meant that the leisure sector has been well treated for much of the crisis, with casinos able to open their doors and business returning to normal much more quickly. Genting’s recovery curve is up and running as a consequence, and they posted a 13% increase in revenue in the first quarter of 2022 compared to that of last year.

That makes Singapore casino operators an attractive proposition for investors, although some of that strength could be diminished if Thailand – a typically more attractive proposition for tourists – goes ahead with their planned legalisation of casino resorts.

That is in the hands of law-makers now after a feasibility study was carried out, and the suggestion is that Las Vegas Sands will be the first operator in Thailand to break ground on an integrated resort.

If given the green light, that could significantly hamper the progress of the sector in Singapore.