Apollo doubles in Las Vegas retail business with latest billion dollar deals

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Apollo Global Management will soon own the Venetian Hotel in Las Vegas, despite an uneven investment track record on the Las Vegas Strip. (Ethan Miller / Getty Images)

Global management of Apollo spent last year saving businesses hard hit by COVID-19 and dealing with the fallout from outgoing CEO Leon Black links with Jeffrey Epstein. Now the company has made a pair of bets on companies it believes are ready for post-pandemic booms.

In a deal, Apollo agreed to pay $ 2.25 billion to acquire the operating company of the Venetian Resort and Sands Expo and Convention Center in Las Vegas from Sands of Las Vegas, the resort and casino company formed by the late billionaire Sheldon Adelson. In another move, rumored for days, the company agreed to acquire Michaels, a chain of stores specializing in the sale of home crafts, under a deal valued at $ 3.3 billion, or $ 5 billion, including debt.

Las Vegas’ economy has been hit by the drop in tourism that accompanied the pandemic. Adelson’s Sands was no exception, posting a loss of nearly $ 300 million in its most recent quarter. But with the intensification of the vaccination effort in the United States and the dramatic drop in cases across the country, Apollo is betting pent-up travel demand could lead to a payday.

“This investment underscores our belief in a strong recovery for Las Vegas as vaccines usher in a reopening of leisure and travel in the United States and globally,” Apollo partner Alex van Hoek said in a statement. .

Apollo is well aware of the effects that an economic downturn can have on Las Vegas. Famous, he acquired Caesars Entertainment (then known as Harrah’s Entertainment) with TPG capital early 2008, in a $ 27.8 billion transaction that involved billions in debt. The investment failed after the onset of the global financial crisis, ending in a contentious legal battle with creditors that was not resolved until 2017.

The Venetian deal represents the latest step in Apollo’s new push into the gambling industry. The company agreed last year to acquire Great canadian game, a casino operator, and he also mounted an unsuccessful bid to buy William Hill, another gaming giant.

Along with the Apollo investment, publicly traded real estate investor Vici Properties will purchase the land and real estate from The Venetian for an additional $ 4 billion. He then plans to lease the land to Apollo.

Michaels, meanwhile, has seen a surge in sales over the past year, as families following stay-at-home orders have tried to stay busy with craft and home improvement projects. In the third quarter of 2020, the company’s sales jumped 15% year-over-year, to around $ 1.4 billion. The Texas-based brick and mortar chain also launched curbside pickup and same-day delivery offers at the start of the pandemic.

But Apollo is also experiencing recent difficulties with private equity in the retail industry. The company has supported Claire’s, a shopping center retailing jewelry and other accessories who filed for Chapter 11 bankruptcy protection in 2018, citing faltering sales and approximately $ 2 billion in debt.

The $ 22 per share price for Michaels represents a 47% premium over the company’s closing price last Friday, the last trading day before sell rumors began to circulate. The company will be subject to a 25-day go-shop period during which it could potentially solicit alternative proposals.

Michaels has experience in private equity. In 2006, black stone and Bain Capital privatized the company in a deal that valued it at over $ 6 billion, then made it public in a 2014 bid that valued it at just $ 3.45 billion.

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