MGM reportedly discussed potential Genting Singapore takeover with company's controlling shareholder

Shares in firm Genting Singapore jumped after reports surfaced that the city-state’s casino operator is attracting takeover interest. US giant MGM Resorts International allegedly recently approached the company’s controlling shareholder -the billionaire Lim family- to express interest in a potential deal.

Genting Singapore’s stock price rose as much as 9.3% on Friday -which represents the most in nearly two years- before trading was halted following a query from the local exchange. Initial reports of the supposed takeover approach were delivered by Bloomberg News, which credits the return of tourists to the Asian travel hub as a potential source of interest for other firms.

People with knowledge of the matter told Bloomberg that while MGM’s discussions with the Lim family didn’t lead to an agreement, other potential suitors have also been in the “preliminary stages” of studying Genting Singapore. The company currently has a market value of about S$9.7 billion ($7 billion).

Genting Singapore is one of only two casino companies operating in the city-state, where it runs Resorts World Sentosa, a 490,000 square-meter destination located on an island off Singapore’s southern coast. The S$6.59 billion (US$5.03 billion) resort launched operations in 2010.

The multi-million venue features more than 550 gaming tables, and over 2,400 slot machines and other electronic games. Other attractions within the resort also include the Universal Studios Singapore theme park, plus an aquarium, water park, restaurants, and shops. At the time of development, it was one of the most expensive resorts ever constructed.

While there is no certainty the deliberations will lead to a transaction, MGM could still resume its pursuit of the company, the people told Bloomberg. Any deal for Genting Singapore would require regulatory approvals in the city-state, along with a green light from Genting Bhd. The Lim family-backed Malaysian conglomerate owns 53% of the business.

Representatives for Genting and MGM have yet to comment on the issue. A spokesperson for the Singapore Ministry of Trade and Industry did respond to Bloomberg’s request for comment, confirming that integrated resort operators must seek the approval of the Singapore Government if they were to consider any sale or subdivision. To date, no request from Resorts World Sentosa to divest or change ownership has been received by the city-state officials, the source said.

According to experts on the matter, takeover interest in the Singapore property comes as no surprise. Post-pandemic recovery at the resort is in full swing, with the region opening up while Western gaming companies look to gain a further footprint in emerging markets.

Rendering for MGM's proposed resort in Osaka, Japan

In addition to running gaming venues in its home market in the US, MGM has operations in Macau, and is seeking to bring a $10 billion integrated resort to Osaka, Japan, a further sign that the firm is looking to expand its Asian presence. It doesn’t, however, currently have any property in Singapore, where only two operators are currently active: Genting, and Las Vegas Sands, the latter running the Marina Bay Sands resort.

The alleged takeover propositions come at a time in which Singapore shows an interest in competing with Macau. The special administrative region of China -the largest gambling hub in the world- has temporarily shut down its casinos by government order in an effort to contain a Covid-19 outbreak: Macau casinos are expected to have zero revenue in the coming months.

The opposite scenario to that in Macau would seem to be taking place in Singapore. Genting Bhd., the Lim family’s flagship company, has seen its net loss narrow in the first quarter, amid predictions of international tourism continuing its gradual recovery. Genting Singapore also managed to remain profitable through much of the pandemic, and most recently reported a 13% year-on-year revenue increase to S$315 million ($225 million).

The conglomerate reportedly aims to ramp up operations at its Malaysian resort following the relaxation of Covid restrictions, according to Bloomberg. It is also seeking to reinforce its position in the US, where it owns New York’s Resorts World New York City (RWNYC) and Resorts World Catskills (RWC), and the $4.3 billion Resorts World Las Vegas (RWLV).