- »MGM Resorts In An $11 Billion Move For Entain Plc
MGM Resorts In An $11 Billion Move For Entain Plc
MGM Resorts is the latest American company attempting to purchase an established British gambling firm. Entain Plc filed a regulatory press release on the London Stock Exchange detailing the potential buy-in.
Entain Plc was called GVC Holdings until late last year. The company, which is listed on the London Stock Exchange, is one of the biggest gambling companies in the world.
The regulatory filing revealed MGM Resorts has offered 0,6 of its shares for every Entain share. This is based on Entain’s closing price on December 31, 2020 and represents a 22% premium on that price. Entain shareholders will represent 41.5% of the enlarged company if the deal goes through.
Why Does MGM Resorts Want to Acquire Entain Plc?
A flurry of British gambling companies have joined forces with American casino operators in recent times. Ever since the US Supreme Court legalised sports betting in 2018, partnerships have formed.
Individual state laws require sports betting sites to form a partnership with US casino operators. These operators traditionally hold the sports betting licences required to operate in the United States.
Flutter Entertainment increased its stake in US company FanDuel towards the back end of 2020. The British firm now owns a 95% controlling stake in the company.
Caesars Entertainment has been busy, too. It agreed to purchase William Hill for $3.94 billion. Now MGM Resorts is getting in on the act.
Entain is a world-renowned and respected company. It owns long-established brands including Bwin and partypoker. Entain spent $5.44 billion acquiring Ladbrokes-Coral in 2017; Ladbrokes is another world-famous betting brand. We understand MGM Resorts offered Entain $10 billion for its Ladbrokes operation, which Entain rebuffed.
MGM Resorts will get its hands on a company that knows the online sports betting world like the back of its hand. Entain’s portfolio includes 3,300 high street betting shops and some extremely busy online gaming sites. The company is squeaky clean and draws between 95-99% of its revenue from regulated markets. Entain aims to increase this to 100% by the conclusion of 2023. This alone means US regulators should have no issue with the acquisition.
The Two Companies Are Already Partners
Entain and MGM Resorts already enjoy a partnership, albeit a relatively small one. They joined forces in 2018 in a 50/50 joint venture called BetMGM. It appears MGM Resorts no longer wants to share the spoils of a rapidly growing sports betting industry in the U.S. Buying out Entain, swallowing up this Goliath of a company, allows them to keep every cent. It is worth noting Entain reported revenue of $4.5 billion in 2019, we are not talking about pocket change here.
MGM Resorts’ main business, the live casino, is struggling. COVID-19 restrictions, including full lockdowns, is decimating revenue and profit. The Bellagio and Mirage and the best-known Las Vegas casinos on the books of MGM Resorts. These continue to operate at a vastly reduced capacity and are barely making money.
Online sports betting and online casinos are, however, thriving. The Las Vegas Gaming Control Board reveals monthly revenue figures for the state’s gambling operations. Casino revenue slumped by 33% year-on-year in November to $528.5 million. Sports betting activity in Las Vegas soared and set a new record of $609.6 million worth of bets processed.
New Jersey’s sports betting figures were even more impressive. The Garden State reported revenue of $931.6 million in November 2020 alone. It doesn’t take a genius to work out why MGM Resorts wants a foothold in the online industry.
Will A Deal Happen?
There are many hurdles to cross before MGM Resorts gets its hands on Entain. It needs to meet Entain’s valuation for a start. The current offer values Entain shares at £13.83 per share, a figure Entain said undervalues the company. The fact Entain’s share price rose more than 25$ to £14.16 on the back of the takeover news shows MGM Resorts where it must aim.
MGM Resorts has until 17:00 GMT on February 1 to make a formal offer or to withdraw.