The Sands Bethlehem Deal: Likely A Positive For Las Vegas Sands, MGM Resorts, MGM Properties

Most of the time when a company sells an asset to another company, the market rewards the perceived “winner” of the deal and punishes the loser. On rare occasion, the market will see a transaction as a win-win for both parties involved.

According to Deutsche Bank analyst Carlo Santarelli, news that Las Vegas Sands Corp. (NYSE: LVS) may be selling its Sands Bethlehem resort to MGM Resorts International (NYSE: MGM) could be a win-win-win for Sands, MGM and MGM Growth Properties LLC (NYSE: MGP).

Asset Sale

Santarelli compares the deal to a similar deal last year in which MGM purchased Boyd Gaming Corporation (NYSE: BYD)’s stake in the Borgata resort.

“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,” Santarelli explained.

He added that Las Vega Sands generated a significant ROIC in the Bethlehem resort and its sale would strengthen the company’s balance sheet as it considers a possible boost to its capital return plan.

For Sands, Deutsche Bank estimates the sale could generate proceeds of around $1.2 billion. For MGM, the firm estimates the property would add between $0.55 and $0.81 in present equity value.

Deutsche Bank maintains a Buy rating on MGM Resorts and Hold ratings on MGM Growth Properties and Las Vegas Sands.

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