Macau’s gaming regulator, the Gaming Inspection and Coordination Bureau (DICJ), says it sees no negative impact on Macau’s gaming industry from Galaxy Entertainment Group’s (GEG) acquisition of a 4.9% stake in fellow concessionaire Wynn Resorts last week.
In a statement, the DICJ said that, based on the information presented to the government, the acquisition “had not violated Clause 10 of Article 17 in Law No. 16/2001,” which stipulates that no casino operator or main shareholders holding more than 5% of a company’s issued share capital can, either directly or indirectly, hold 5% or more in a rival operator.
“Nor had it brought any negative impact on the operation of Macau’s gaming industry,” the DICJ added.
GEG revealed on Friday that it had agreed to acquire 5.3 million shares in Wynn Resorts for US$927.5 million, the announcement coming just hours after former Wynn Resorts Chairman and CEO Steve Wynn sold off the first one third of his stake. Wynn has since reached an agreement to sell off the remainder of his shares.
The DICJ said that it had previously been informed by Wynn Resorts (Macau) of the sale of Wynn’s shares and the company’s intention to change its shareholder equity structure.
News of Galaxy’s acquisition sparked speculation among analysts that Galaxy may in future look to takeover Wynn Macau in order to position itself as Macau’s leading gaming operator.
“The initial purchase gives Galaxy a first bite at the company,” said Bernstein’s Vitaly Umansky, Zhen Gong and Cathy Huang. “We do not believe that Galaxy would be a buyer of Wynn Resorts in totality, but with China/Macau government approval a Galaxy acquisition of Wynn Macau assets would create the leading Macau gaming company – larger than the current top market share holder Sands China.”
Union Gaming’s Grant Govertsen said that, should Galaxy acquire Wynn Resorts itself, it would likely sell off its US assets and possibly even peninsula property Wynn Macau, retaining only Wynn Palace in Cotai.
“In Macau, and considering Galaxy’s long-term strategic view that Cotai represents the future … we could see another trade go up with another entity acquiring Wynn Macau on the peninsula.
“Keeping Wynn Palace on Cotai would give Galaxy the premier high-end asset in that geography (further cementing their status as the premium high-end operator), while also giving them further growth pipeline in the Phase 2 site at Wynn Palace.
“Combined with Phases 3 & 4 at Galaxy Macau, and Broadway, this would give Galaxy no less than four major projects.”
In response to such suggestions, the DICJ said it will “continue to monitor and analyze developments regarding the changes in the shareholding structure of Wynn Resorts and the possible influence of that on the related Macau concessionaire.
“The government, as always, strictly monitors and enforces Macau’s gaming regulations and laws, including maintaining oversight regarding any changes in stock ownership and shareholdings affecting the city’s gaming concessionaires in order to ensure a healthy development of the sector.”
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