In Q2, BetMGM generated positive EBITDA, while analysts speculate that Entain could potentially be targeted for a takeover once more.
BetMGM's improving financial performance could lead MGM Resorts International (NYSE: MGM) to consider acquiring Entain Plc (OTC: GMVHY) once more. Previously, MGM management expressed disinterest in pursuing this action.
In a financial update announced on Wednesday, BetMGM revealed its earnings before interest, taxes, depreciation, and amortization (EBITDA) increased during the second quarter and may continue to do so for the remainder of 2023. Furthermore, the joint venture between the two companies is expected to be self-sustaining soon, which would reduce the need for investment from either partner.
In a research alert, Jefferies analyst James Wheatcroft suggested MGM might attempt to buy Entain as early as next month. The valuation of Entain based on MGM's previous offer in early 2021 would place the target company at $29.68 per share, significantly higher than its closing price on U.S. exchanges ($17.69). Entain is primarily traded on the London Stock Exchange, with over-the-counter trading available in the U.S.
Despite MGM executives stating they're not planning on bidding for Entain again, they have expressed a desire to own 100% of BetMGM.
BetMGM's Sustained Growth
Although BetMGM's market share in the online sports betting sector lags behind FanDuel and DraftKings (NASDAQ: DKNG), it has shown remarkable financial progress.
BetMGM's CEO, Adam Greenblatt, stated that the company's financial projections for the year remain unchanged and will likely result in $1.8 to $2.0 billion in full-year revenue and EBITDA profitability in the second half of 2023. Additionally, the first half of this year has seen a 25% increase in net revenue in the same states, as well as a 65% increase in per-player revenue for clients who joined the platform before 2021.
BetMGM is currently operational in 26 jurisdictions, covering 46% of the U.S. adult population. It has operations in Massachusetts, Ohio, and Puerto Rico, which began in the first half of this year.
BetMGM's iGaming market share stands at 27%, a strong position within the industry. In markets where it has been active since the beginning, its sports betting share is 13%.
Will MGM Acquire Entain Again?
There is considerable speculation regarding MGM's potential acquisition of Entain. However, several factors are certain. First, talk of this happening remains prevalent. Second, acquiring Entain would require a hefty price tag. Entain's current market capitalisation is $10.17 billion, so any buyer would need to offer significantly more than that to initiate negotiations.
Third, MGM has been successful in building a strong cash position, allowing it to potentially make a significant investment in the future if it chooses to do so. The company reports its second-quarter earnings results on August 2. This announcement could provide more insight into their long-term strategy for BetMGM.
A possible scenario for BetMGM gaining full ownership of Entain would be through an acquisition. However, the price tag would be substantial, which may affect MGM's appetite for such a move. Although Entain has been expanding its portfolio through acquisitions, any potential buyer would need to evaluate these investments.
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Source: www.casino.org
