Recently, as has been well covered in the press, Sheldon Adelson and his Las Vegas Sands Corporation have been closing legal issues and lawsuits in a seemingly uncharacteristic clear-the-desk manner.
Usually when a principled passionate fighter like Mr. Adelson, well known for fighting hard and vigorously defending his interest and positions, clears a desk like this, there is another agenda of higher priority. Perhaps it could be interest in a new gaming jurisdiction or the renewal of existing licenses, in which some of the litigation might prove to be an unnecessary licensing distraction.
Perhaps at his level of wealth the various legal matters were annoyances beyond his concern for the money; after all, at $25-plus billion of wealth, $50 million here, $100 million there might have the same impact on him as a Ten or a Twenty might have on you or me.
Perhaps he is doing some estate planning and wanted to simplify his life as he looks forward to his next decade or two.
However, of all the speculated possible motivating reasons, the most interesting is the idea that Mr. Adelson might be getting things ready for a merger with Wynn Resorts.
Think about it… if you are looking at estate planning, possibly a level of recreational retirement and successor planning for your company, would you not be thinking about merging with a company that could complement your own assets, strengthen the overall portfolio, add a respected potential successor to the team and eliminate a competitor in one fell swoop?
Merging would also be a great way to dilute your percentage of shares for ease of disposal, create new classes of stock, add share value and liquidity and possibly make a REIT structure such as MGM’s a viable option.
On the other side, if you are Wynn, you could be motivated by seeing your company merge into a more diversified entity, lose a competitor over new markets, have a bigger balance sheet to play with and continue doing what you do best – develop great destination mega-resorts. If you are Steve Wynn, it would also be a great way to gracefully close off the Elaine Wynn lawsuit in a very natural, simple and graceful way.
From a pure business perspective, should such a speculated merger take place, the combined companies would save huge amounts of money from consolidated corporate overhead, see enhanced new jurisdiction opportunities by being able to take on more simultaneous projects, and streamline market positioning.
Just imagine, with their respective competitive interest in Macau – if they combined – their marketing power would be huge. They could both sell their downtown properties in Macau, knock down a lot of debt and exit the much lesser desired downtown Macau in favor of focusing on the more resort oriented Coati Strip.
The resultant combined company could then also easily enter the premium pure retail hotel market, which neither company is seemingly currently positioned to successfully exploit. Separately, as most Las Vegas destination resorts have started to rely more and more on their regional locations to feed patrons to them, a merged company could have a much broader level of attraction and natural patron flow.
Usually when there is a merger of two companies, in the short run, one company’s share price goes up and the other company’s goes down. In this case such a speculated merger, if it were to become a reality, would probably show both companies’ share prices to precipitously rise.
While this of course is all speculation, it does seem to reasonably fit with the recent bonding of the two gentlemen, could explain the recent desk clearing of legal issues and lawsuits at LVS, could certainly help both entrepreneurs’ seeming personal desires, take two great companies and make them a phenomenal company – all while saving truckloads of money from the combined synergies.
It is hard to believe it was just a year ago that Mr. Kirk Kerkorian, the most unsung king of Las Vegas casino developers, pioneer of the Mega-Resort, egoless charitable giver, creator of more jobs than probably anyone else in Las Vegas, passed away at 98. While he is and will continue to be missed, his passing may have sparked some introspection and estate planning by a couple of other youngsters like Sheldon Adelson, a spry 83, and Steve Wynn, a comparative juvenile at 74, which might just result in a deal like Kerkorian would have done.
The Analyst is an experienced gaming industry executive who offers insight each week on events and issues affecting the industry. Contact The Analyst at [email protected]