Belle Corp passes on the right to buy City of Dreams Manila

Belle Corp [BEL 1.53, down 0.7%] [link], the gaming developer owned by the SM Group (the largest shareholder is SM Investments [SM 808.00, up 5.6%]), said in response to a BIZ BUZZ article that a “buy-out of Melco’s interests in COD Manila is not part of Belle’s plans for the immediate future”. City of Dreams Manila is owned by Lawrence Ho’s Melco Resorts, which is looking to sell COD Manila to address alleged debt problems. As reported by InsiderPH, sources close to the matter said that BEL had a right of first refusal on the purchase of COD Manila that it has already waived. As noted by the InsiderPH article, BEL is the landlord to the COD Manila development, and is a co-license holder with Melco Resorts in the casino side of the business.

MB bottom-line: BEL is the obvious potential buyer, so why isn’t it buying? It has right of first refusal, it already owns the land, and it’s a co-licensee for the casino. Seems like a natural fit, right? This sounds like a case where BEL thinks Melco’s initial price is too high, and has waived its right to purchase to let Melco learn that lesson the hard way on the open market. This makes the BEL disclosure line, “not part of Belle’s plans for the immediate future” , make way more sense. Let Melco taste the bitter fruit of rejection and sulk back to the negotiating table with BEL. Gaming is a hot sector, but it’s more about digital gaming through stocks like DigiPlus [PLUS 33.60, down 3.3%] than it is about physical gaming. 

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