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Melco Report

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Submitted By ANEEQ29
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Introduction
Melco was a developer, owner and operator of resorts and casino in Macau, China. It was formed in November 2004, as a joint venture between Melco International Development Ltd. And publishing and broadcasting Ltd. Melco was one of the only six companies authorized by the government of Macau to operate casinos in the territory of Macau. Melco was one of the two pure plays of Macau that had been deemed possible acquisition targets by American gaining firms.
Overview of the Sector
The gaming sector had been fragmented until the late 1990s, when consolidation had begun to take place.last two years had brought about an especially torrid pace of activity, as firms merged and private equity firms acquired companies. During that time, there was an endless amount of cheap debt and private equity firms were eager to leverage the strong, rapidly rising cash flows of gaining firms. During the summer 2007, this active market has taken a turn to the worse. The gaming market was split into three customer segments (day trippers, multi-night visitors and VIPs). Each of these customer segments were of different nature.
Background of Macau
Macau was the only place in China where gambling was legal. In 2006, for the first Macau displaced Las Vegas as the worlds gaming market. Because Macau’s $6.98 billion in gaming revenue exceeded Las Vegas’s $6.69 billion revenue. Macau’s gaming revenue would exceed $15.5 billion in 2010 whereas Las Vegas expected to generate only $8.67 billions. The market in Macau was sensitive to the decisions made by government in the region.
IPO offering
When the Melco announced initial public offering, MGM showed its willingness to pay $8 billion for Melcos equity. But they did not disclose that how MGM would finance the deal. But the problem with IPO is that it is a long, complicated process that can create a trouble.
Takeover offer
MGMs interest

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