Galaxy to benefit from luxury markets in SBM deal

Monday 27th of July 2015

Bernstein Research said the strategic value of Galaxy Macau’s investment in Monaco casino and hotel operator SBM lies in potential access to luxury European brands.

“The long-term strategic value of this investment stems from the strategic relationship that can be developed with SBM and LVHM and future potential access to the luxury European brands owned by SBM and LVMH,” analyst Vitaly Umansky said in a note.

According to Galaxy's announcement, the company invested €42.3 million ($46.7 million) for 4.99 percent of the issued shares of SBM.

Separately, LVMH Moet Hennessy Louis Vuitton invested 5 percent in SBM for an undisclosed amount. Galaxy and LVMH will each have a seat on the SBM Board.

SBM owns luxury hotel brands, including Hotel de Paris Monte-Carlo, Monte-Carlo Bay Hotel & Resort, and Monte-Carlo Beach.

“Galaxy may be able to leverage its relationship with SBM for Galaxy's future project developments. These luxury hospitality brands could be strong additions to Galaxy's future development pipeline as they would appeal to high-net-worth Chinese (and other Asian) customers.”

“Overall, we believe the relatively small investment by Galaxy has long-term strategic values, primarily stemming from the access to the luxury hospitality European brands owned by SBM and potentially a stronger relationship with LVMH.”

Mergers & Acquisitions Monaco Luxury brands LVMH