May 6 (Bloomberg) -- Galaxy Entertainment Group Ltd., the Macau casino owner that doubled profit last year, will buy a casino hotel on the city’s increasingly popular Cotai strip. The company’s stock rose to a record.
Galaxy advanced 5.9 percent to the highest since its 1991 listing after saying it would pay HK$3.25 billion ($419 million) for Grand Waldo which includes a spa, casino and a 320,000 square-foot hotel. The casino inside the hotel is already run by Galaxy, which holds one of Macau’s six gambling licenses.
The reclaimed land that joins the Cotai and Taipa islands in the former Portuguese colony is being built into Asia’s equivalent of the Las Vegas Strip. Casino operators from Sands China Ltd. to Melco Crown Entertainment Ltd. are adding shopping malls, spas and shows to their resorts, competing for casino revenue that Deutsche Bank AG estimated will grow to 44.5 billion this year after the record $38 billion last year.
“The deal will help broaden Galaxy’s portfolio as Galaxy Macau resort on Cotai appeals to the premium mass while Grand Waldo can draw the lower end mass market gamblers,” Grant Govertsen, an analyst at Union Gaming Research, said by phone today. The company’s StarWorld on the Macau peninsula focuses on the high-stakes gamblers, he said.
Grand Waldo is “strategically located” and it will complement existing Galaxy properties, according to Peter Caveny, vice president of investor relations at Galaxy Entertainment. The property is located next to the Galaxy Macau resort. Galaxy expects the deal to be completed in the third quarter this year, said Caveny.
Grand Waldo owner Get Nice Holdings Ltd. surged 11 percent to 40 Hong Kong cents.
Founded by billionaire Lui Che-Woo, Galaxy has received approval from the government to add 50 tables this year, Deputy Chairman Francis Lui said in March. The company plans to invest as much as HK$50 billion to expand the third phase of Galaxy Macau.
Sands China, the Macau casino controlled by billionaire Sheldon Adelson, received approval in January to add 200 additional gambling tables. Its latest resort, Sands Cotai Central, was opened in April last year. Sands is investing $2.8 billion in the world’s largest gambling hub to build its fifth on Cotai.
Hong Kong-based Galaxy in March reported annual profit that more than doubled to HK$7.4 billion from HK$3 billion a year earlier.
Casino revenue in Macau, the only place in China where casino gambling is legal, is expected to exceed $100 billion by 2020, according to estimates by CLSA Ltd.
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