Melco buyout of Studio City, merger with Hong Kong parent would unlock shareholder value: Bernstein

April 29, 2022 Macau Industry Updates

Macau casino concessionaire Melco Resorts & Entertainment has been encouraged to complete a full buyout of Studio City International Holdings and merge with parent Melco International Development in a bid to unlock shareholder value and remove risks around its US NASDAQ listing.

In a Thursday note from brokerage Bernstein, described as part of a series examining potential corporate actions to unlock shareholder value, analysts Vitaly Umansky and Louis Li note that Melco is the worst performing Macau stock so far this year, in part due to US investor concerns around de-listing.

The de-listing issue related to new regulations adopted by the US Securities and Exchange Commission (SEC) in January which stipulate, among other things, that audits of listed companies must be conducted by firms subject to inspection by the US Public Company Accounting Oversight Board (PCAOB). Melco has been included on a list of foreign companies whose auditor does not qualify, meaning it will be given a three-year countdown to find a solution or delist. Studio City has also been named.

In Thursday’s note, Bernstein said a full acquisition of Studio City and merger with the parent would solve a host of issues, including that of its US listing status.