By P.R. Venkat, Prudence Ho and Kate O'Keeffe
U.S.-based asset manager Waddell & Reed Financial Inc. sold
out of Las Vegas Sands Corp.'s Macau unit in a US$1.38 billion
share placement.
Waddell & Reed said it established a similar position in
U.S.-listed Las Vegas Sands by buying 17 million shares in the
firm.
Waddell & Reed sold 192.64 million shares, or a 2.4% stake,
in Sands China Ltd. at 55.45 Hong Kong dollars (US$7.15) a share,
according to a term sheet seen Wednesday by The Wall Street
Journal, in the middle of an expected HK$55.27 to HK$55.90 price
range. The final sale price represents a 4.8% discount to Sands
China's Tuesday closing price of HK$58.25.
The asset manager said it is swapping stakes due to the "greater
market liquidity in shares of Las Vegas Sands compared to Sands
China." It continues "to have a positive view on the investment
outlook of Las Vegas Sands and its ability to generate revenue in
China and elsewhere around the world."
While Sands China offers investors a more focused exposure to
Macau, which is the world's largest gambling market with $45
billion in gambling revenue last year, Las Vegas Sands has a more
diversified portfolio with casinos in Singapore, Las Vegas and
Pennsylvania.
Las Vegas Sands is also trying to push into new international
markets, such as Korea and Japan. Brokerage CLSA believes Japan
could become a $40 billion casino market. Recently, though, casino
companies, investors and Japanese politicians have become less
hopeful that casino-gambling legalization is imminent.
"Sands China grows faster than Las Vegas Sands and pays more
dividends," said one investor who is keeping his shares in the
Macau unit. He also said he expects Sands China to remain dominant
in the Chinese territory for a while.
U.S. rivals Wynn Resorts Ltd. and MGM Resorts International
won't have their first properties in Macau's booming Cotai area,
now the center of growth in the territory, for a couple of years.
Las Vegas Sands opened its first--the sprawling Venetian
Macao--seven years ago and is already working on a fourth property
in the area.
Sands China shares have risen more than 40% over the past 12
months as investors expect the casino operator will continue to
benefit from the spending of wealthy gamblers from mainland China
and elsewhere. Sands China was down 1.8% at HK$57.20 midday.
Macau's April gambling revenue rose 10.6% from a year earlier to
31.3 billion patacas (US$3.9 billion), according to Macau's Gaming
Inspection and Coordination Bureau.
Waddell & Reed has been selling its Sands China holding over
the past few years. In May 2011, it sold 114 million shares,
decreasing its holding to 4.78% from 6.21%. It sold shares after
that as well.
Bank of America Merrill Lynch is the sole bookrunner handling
the placement.
Write to P.R. Venkat at venkat.pr@wsj.com and Prudence Ho at
prudence.ho@wsj.com
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