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Studio City, one of Macau's prime development locations, may finally be close to reality now that one of Macau's gaming giants is on board. And it's been a long time to get this far.
Waiting patiently for the right hand is often the best way to gamble, but in practice it's harder than it looks. When a company is watching competitors design and open new developments in the world's largest gaming market, it's even harder to wait for the right opportunity. But Melco Crown (Nasdaq: MPEL ) may have done just that yesterday when it acquired 60% of the Macau Studio City Project on the Cotai Strip.
Melco Crown will be buying a majority of the development from eSun Holdings Limited, which has been at odds with minority partner New Cotai Holdings for years, for $260 million. New Cotai, which is owned by Silver Point Capital and Oaktree Capital Management, will also be paid $100 million in the deal.
The management battle has put the prime development in question even as the Macau gaming market grows more lucrative. Studio City was supposed to open in 2009, and partners Taubman Centers and Playboy Enterprises have already backed out of their agreements. So with Melco Crown in the fold, we don't really know what the property will look like.
The other speculation is when a development may be ready. A land grant has already been given for Studio City, so construction can begin any time. That could potentially put Melco ahead of Wynn Resorts (Nasdaq: WYNN ) and MGM Resorts (NYSE: MGM ) , who are targeting 2015 for their Cotai casinos. Still, Melco said it wouldn't be able to open the casino even by 2013.
But this morning's news wasn't as jovial in Asia's other gaming market.
Don't mess with Singapore
Las Vegas Sands (NYSE: LVS ) is now on notice. The Singapore government has told the company that its plan to sell the Marina Bay Sands mall in two to three years won't be happening. The bid Las Vegas Sands won to build the mall includes a provision in which the company can't "sell, transfer or dispose of its estate interest" for 10 years. Sorry, but 2017 is the soonest any sale will happen. And even then, the company must consult the Singapore government if it intends to move the property.
Score one for Melco Crown
Today's announcement gives Melco Crown new growth avenues it's lacked in Macau, even though we don't know many details yet. With Las Vegas Sands de-leveraging plans taking a blow in Singapore, Melco Crown may again be the best buy in gaming.