Kung hei fat choi/Gong xi fa cai. As the Year of Pig dawns, Stanley Ho’s daughter Pansy Ho has again moved to seize the family empire. After leading the 2011 coup against her father that gave Ho and siblings a big piece of the patrimony, she now wants control of SJM Holdings, the casino operator that’s the legacy of her father’s 40 year reign as Mr Macau, currently run by Angela Leong, his fourth wife. Pansy Ho’s move raises complicated issues about Macau’s gaming future and begs one simple question.
Shun Tak Holdings, headed by Pansy Ho, has announced an alliance with the Fok Foundation to control SJM. According to a January 23 Hong Kong stock market filing, the alliance partners hold 53% of Sociedade de Turismo e Diversoes de Macau (STDM) which in turn owns 54% of SJM.
To counter the 2011 attack, Stanley Ho distributed STDM shares and other assets. He gave Leong, whom he met as a dance instructor and at 57 is 40 years his junior (and 18 months Pansy Ho’s senior), a 6% stake in STDM, plus 8% of SJM (together valued around US$700 million), making her the listed company’s largest individual shareholder, plus a guarantee to remain SJM executive director for six years. Many expected Pansy Ho to move against her apparent arch enemy once that guarantee expire. Others foresaw the family feud remaining on hold as long as Stanley Ho lived. In a family where Stanley Ho allegedly blackmailed his sister Winnie Ho (a 7% owner of STDM) over her love affair with cousin Eric Hotung, Pansy Ho may believe undermining relatives upholds family tradition.
When Macau ended Stanley Ho’s casino monopoly in 2002, he believed his market knowledge ensured continued success. But when Sheldon Adelson’s Las Vegas Sands opened Sands Macao in 2004, Ho’s jaw dropped, and so did the coin. He realized that customers wanted something better than SJM’s tired offerings, so he built Grand Lisboa, a top of the line product on Macau peninsula, the downtown casino hub. Ho had SJM again atop casino market share in July 2009 when he fell in the bathroom, eventually undergoing three brain surgeries and effectively ending his business career. SJM has foundered since, lacking presence in Cotai, the new center of Macau’s gaming gravity, with integrated resort Grand Lisboa Palace optimistically scheduled to open late this year.
When Daisy Ho – Shun Tak’s CFO under her big sister – replaced Stanley Ho as SJM chairman in July, Pansy Ho won another battle. Now she’s declared war. The alliance says it will field candidates for SJM’s board of directors election expected in March. Deutsche Bank’s Karen Tang underscores that plan threatens directors Leong, SJM CEO Ambrose So and COO Louis Ng.
The alliance also says it will attempt to extend SJM’s gaming concession expiring in March 2020 (along with MGM China’s subconcession), odd to highlight if you’re trying reassure investors, Sanford Bernstein analyst Vitaly Umansky points out, especially since current management is already seeking an extension. Both Bernstein and DB note that boardroom upheaval may disrupt SJM operations, especially unwelcome with the Cotai opening looming.
Pansy Ho asserting a bigger role at SJM conflicts with her current role as co-chairman (and 22.5% owner) of MGM China. Macau rules, ignored when convenient, state no one may have a management role in more than one concessionaire. If Pansy Ho does take control of SJM, that could enable regulators to finesse SJM and MGM into a single concession, then either reduce the number of concessions or award one to a new player, either move potentially popular.
Moving against Leong, elected to Macau’s Legislative Assembly and, like Ho, a member of the mainland’s Chinese People’s Political Consultative Conference, appears a risky test of Pansy Ho’s Macau clout. Getting Leong to leave quietly, Bernstein notes, could go beyond buying out her SJM shares. She holds land next to the Grand Lisboa Palace site, and in October, son Mario Ho announced plans for a HK$5 billion (US$637 million) Macau nostalgia resort called Lisboeta. The land and the plan could become part of negotiations.
Beyond all that, if you’re a STDM or SJM shareholder, ask yourself what Pansy Ho brings to the table. Shun Tak’s share price is less than a third of what it was a dozen year ago. MGM in Macau remains at the bottom of market share standings, despite more than doubling its capacity with the opening of MGM Cotai a year ago, the next-to-last operator present there. There’s plenty of blame to go around but insiders contend Ho contributes significantly to MGM’s lackluster performance. If she has great ideas on operating casinos in Macau, she’s kept them secret so far.
Pansy Ho’s pursuit of SJM brings to mind a dog chasing a car. Neither has a clear idea of what to do if it succeeds.
Hong Kong On Air author Muhammad Cohen is Editor At Large for Inside Asian Gaming. Follow him on Twitter @Muhammad Cohen.