MGM Resorts International says it is considering making an offer to complete a takeover of Entain PLC, the British iGaming and sports betting firm that owns Ladbrokes.
The global casino giant issued a statement overnight following media reports that it was set to acquire Entain – already the company’s joint venture partner in the US online gaming market – in which it confirmed it had proposed an offer but denied any such transaction was guaranteed.
According to the statement, MGM has proposed an offer of 0.6 MGM shares for each Entain share, believed to value the latter at around US$12.9 billion and representing a premium of 22% on Entain’s current share price.
Under the terms of the proposal, MGM added, Entain shareholders would own approximately 41.5% of the combined company. A partial cash alternative has also been mooted, as has the possibility of IAC – MGM’s largest single shareholder – funding some of that cash alternative via further investment in MGM.
It is understood that Entain believes the offer is too low although MGM said it has been asked to provide additional information in respect of the strategic rationale for a combination of the two companies.
“MGM believes both its proposal and the strategic rationale for the combination are compelling and looks forward to engaging with Entain on this basis,” it said.
In particular, MGM said such a combination would deliver full control of the BetMGM business to leverage the rapidly growing US iGaming and sports betting opportunity; position the company as a global gaming company across both online and retail with a leading end-to-end technology stack; expand and diversify the company’s operations, product offerings and earnings; and position the combined company for future growth and investment by leveraging its leading brands, leading technology platform and strong balance sheet.”
Union Gaming’s John DeCree said in a note that acquiring Entain would help MGM integrate the digital gaming segment with its land-based casino and entertainment businesses to create a “holistic omni-channel offering.”
“We believe the omni-channel integration across digital and land-based gaming is a significant opportunity that is still widely overlooked by investors,” DeCree said. “While Entain brings technology and experience in the digital gaming industry, there is significant value across MGM’s well-known brands, its 34m+ Mlife loyalty members, and top notch land-based casinos (and market access) across the US.
“We believe MGM’s pursuit of Entain is a smart, strategic effort that would allow BetMGM to maximize ROI on customer acquisition across multiple channels. It would also give BetMGM direct access to MGM’s fortress balance sheet that offers more efficient capital for growth.”
