ne of MGM Resorts International's Asian investors, Snow Lake, wants the U.S. casino operator to sell a fifth of its $6 billion Macau business to a Chinese partner.
Snow Lake Capital Limited, an Asian alternative investment management firm, sent a letter to MGM's Board of Directors on Wednesday urging them to sell 20% of their MGM China Holdings Limited business to a Chinese company as a strategic investor. Snow Lake beneficially owns 7.5% of the outstanding shares.
As a response to the letter, MGM issued a statement on the same day: "MGM Resorts remains committed to Macau and will continue to take actions that are in the best interests of its shareholders and stakeholders. We appreciate continued constructive engagement with MGM China shareholders."
Macau plans to entertain bids for casino concessions next year. The world’s biggest gambling hub accounted for almost a quarter of MGM's $12.9 billion of revenue in 2019.
Amid the tense relationship between China and the United States, both Beijing and Macau might prefer local ownership, which could drive this decision from shareholders, as reported by Reuters. Macau’s three American operators have been trading at a discount to homegrown companies such as Galaxy Entertainment, SJM and Melco Resorts and Entertainment, in terms of their enterprise value to EBITDA multiples. A Chines partner might help MGM make a stronger case for a new licence and favourable terms. Snow Lake founder Sean Ma suggested online travel outfit Trip, food-delivery to bookings giant Meituan, hotel chain Huazhu or tourism group Sunac China as possibilities.
An $11 billion offer from MGM Resorts for Entain, the owner of British betting shop Ladbrokes, was rejected this week. MGM Resorts is also poised to apply for a licence in Japan, a project that could require a $10 billion investment.