Capital Calls

17 Jan 2022 By Breakingviews columnists


– Elliott and Clinigen

– Macau casino licences

Try it on. A sweetened 1.3 billion pound offer for Clinigen has got hedge funds like Elliott Management out of a tight spot. The U.S. activist investor piled into the UK pharmaceutical company hoping for a counterbid to an 883 pence-per-share tilt bid from British buyout firm Triton in December. That pushed Clinigen shares as high as 942 pence, their strongest since before the pandemic.

Frustratingly for Elliott, which now owns more than 10%, alternative buyers have been hard to find.

That’s not surprising. Triton’s first bid implied a measly 14% internal rate of return, according to Breakingviews calculations based on 6% annual revenue growth, stable margins, leverage at 6 times EBITDA and an exit in 2027 at a similar multiple. Rejecting the offer risked Clinigen shares plunging 40% or more. With Triton upping its bid to 925 pence, in line with where many hedge funds bought in, speculators can at least exit with their clothing intact. (By Ed Cropley and Aimee Donnellan)

Magic number. Macau will offer six 10-year casino concessions when licences expire later this year – enough for all the current holders to extend their stay in the world’s largest gambling hub. Investors sent shares of the four New York-listed operators, Wynn Resorts, Melco Resorts and Entertainment, MGM International, and Las Vegas Sands, up an average 10% on Friday, adding about $6 billion to their market value – equivalent to the combined annual EBITDA from their Macau operations before COVID-19 all but shuttered casinos in the enclave.

Sure, it frees the six operators from fears authorities would reduce the quota but there is no guarantee that the current holders will win the rebidding process. If they do win, they may have to dig deep into their pockets: In Singapore, for example, two casino operators committed to investments of almost $7 billion to secure concessions. Another unknown is how Macau will recover as China doubles down on its zero-Covid policy. There are no signs of easing convoluted border controls, and Macau tightened restrictions again on Saturday. Relief may be short-lived. (By Katrina Hamlin)


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