-
Casinos for you
Entain PLC Rebuffs $11 Billion Buyout Bid From MGM
By Jeff Osienya Jan 04, 2021 IndustryEntain, a leader in the UK’s gambling industry has rejected a takeover bid worth $11 billion from MGM Resorts International, the owner of the Mirage, Sin City’s largest casino property.MGM Resorts International, the largest gaming operator in the Las Vegas Strip has attempted to acquire Entain PLC for $11.06 billion (£8.09 bn). Entain was formerly known as GVC Holdings before rebranding last month, and it is the gaming powerhouse behind world-renown gaming platforms such as Ladbrokes, Bwin, Coral, PartyPoker, Betboo, Eurobet, Gala Bingo, and SportingBet.
Information from undisclosed sources, as reported by the Wall Street Journal indicate that MGM’s latest proposal was a second shot at taking over the FTSE 100-listed Entain after the first all-cash $10 billion (£7.3 bn) buyout attempt failed to pan out. This time around, Entain brushed off MGM Resorts International’s offer and released a statement saying that the latter has greatly underrated how valuable it was as a gaming brand. Part of the briefing read as follows;
Quote“Entain has informed MGMRI that it believes that the proposal significantly undervalues the company and its prospects. The board has also asked MGMRI to provide additional information in respect of the strategic rationale for a combination of the two companies.”
This acquisition proposal by MGM, the owner of Sin City’s famed Bellagio Casino, puts the share value of Entain at $15.70 (1,383p), which is 22% higher than the $17.56 (1,133.5p) share price that was reported on 31st December. This was the last trading day before reports of the acquisition attempt was first reported. Per MGM’s proposal, 41.5% of the combined company would remain in the hands of Entain shareholders.
Competition in USA’s iGaming Market is Getting Stiffer
MGMRI’s market value is roughly $16 billion as we speak, and it’s one of the most dominant names in the Vegas Strip. Aside from the Bellagio, the company is also known for the Mirage casino, among other resort properties which were been dealt a blow after blow for the better part of 2020 due to the Coronavirus pandemic. Casinos in the USA’s gambling Mecca have been operating at limited capacity since they were reopened after forced COVID-19 closures and consequently, their revenue streams have taken some of the sharpest dips in history.
Unlike land-based in-person gaming, online gaming in the US has flourished with the Coronavirus giving it an unprecedented boost. The restrictions for brick-and-mortar gaming drove gamblers online and it led to record-breaking numbers for both online casino and sportsbook handles for consecutive months in states like New Jersey, Indiana, and Nevada itself.
With such tremendous growth for iGaming in the US as states continue to legalize the online gaming vertical, gambling companies have been betting big on the burgeoning US online casino and sports betting market. Penn National made one of the first moves by acquiring 36% interest in Barstool Sports in January 2020 to become the majority shareholder, and DraftKings went public via a Special Purpose Acquisition Company (SPAC) in April. Caesars Entertainment, another gaming leviathan is also making preparations for acquiring William Hill, with the deal expected to close mid this year.
MGM Has Already Been Working with Entain
Even though Entain rejected MGMRI’s acquisition bid for the second time, it’s worth noting that the two gaming giants are already working together on an incredibly successful project in the USA market. MGM and Entain struck a $200 million 50/50 deal back in 2018 to launch BetMGM, a venture aimed to tap into the just-opened-up US sports-betting market after the PASPA act was repealed by SCOTUS.
From the look of things MGM has tasted the lucrative nature of US online gaming with the BetMGM brand and it now wants to go all in and expand its reach by forming one of the largest team-ups in the market. The move to acquire Entain in its entirety only makes sense at this point as the two brands already strengthened their ongoing partnership in another $450 million wave of investment in July 2020.
Based on the takeover law in the United Kingdom, MGMRI has up to 1st February 2021 to either withdraw or give the buyout bid one more shot.
You might also like