MGM has yet to present a definite bid for Entain.
In the beginning of January, there was a billion-euro takeover proposal by MGM Resorts for Entain (then known as GVC), which created quite a buzz. However, MGM never specified any clear terms, and Entain believed the offer was too low. According to the City Code on Takeovers and Mergers, MGM had until February 1 to make a firm offer. Now, MGM has decided not to follow through with its proposal.
Aborted Merger
The prospect of a merger between MGM and Entain sent shockwaves through the gambling industry at the beginning of January. The two powerhouses in the industry had been united by a joint venture in the fast-growing American sports betting market since August 2018. If MGM had taken over Entain, it would have been one of the largest mergers in history. But MGM now says it isn't planning to take its merger plans any further.
MGM announced that after careful thought and deliberation, it had decided not to make a revised offer, despite the deadline of February 1 set by the City Code on Takeovers and Mergers. The initial offer was worth $11 billion.
The Background
The original bid was a share-swap deal, with MGM shareholders receiving 0.6 shares for each Entain share. This would have represented a 22% premium on Entain's share price and would have given shareholders a cash alternative option. Entain, the new name for the company that owns Ladbrokes, disagreed, stating that the offer significantly undervalued their company.
Since 2018, Entain and MGM have partnered through a joint venture called Roar Digital. This joint venture was a result of the US legalization of online sports betting, which allowed Entain to obtain a license in the American market. MGM, on the other hand, benefits from Entain's strong online presence. The agreement created BetMGM, which has been making waves since September with the involvement of Hollywood star Jamie Foxx. Each company holds a 50% stake in Roar Digital.
IAC, the majority shareholder of MGM Resorts, announced at the start of the year that it would support the proposal. It was prepared to make up to $1 billion available to fund a cash offer for shareholders unwilling to swap their shares for MGM shares. However, both MGM and Entain confirmed that the failed merger had no impact on their ongoing partnership.
BetMGM is Vital for MGM
BetMGM received an initial investment of $200 million in 2018. This amount was increased to $450 million in July 2020. According to MGM CEO Bill Hornbuckle, BetMGM remains a top priority for the company. Even though MGM already has established land-based gaming, entertainment, and hospitality formats, it wants to grow further digitally.
The partnership with Entain is crucial to this goal. MGM could become one of the top three US market leaders for sports betting in the long run. It plans to be present in more than 20 states by the end of 2021. In a press release, Hornbuckle confirmed that MGM is looking forward to continuing working closely with Entain.
Online sports betting is currently legal in 19 US states and is booming like never before. In 2020, the American Gaming Association reported record turnover in the US betting market for August, marking the fourth month of growth in a row. Bets amounted to $2.1 billion, the highest monthly betting volume in American history. This resulted in revenues of $119.4 million, making it the second-highest grossing month on record.
Entain Presents Offer for Enlabs Takeover
While Entain is making headlines overseas, it's also making moves in Europe. The iGaming giant has published a full offer to acquire the Baltic operator Enlabs. The value of the offer is around €276.4 million. Like the MGM offer, it's a share-swap deal, offering Enlabs shareholders a 1.1% premium based on the closing price on January 5.
According to Entain, the main reason for this offer is to expand into the Baltic market. Entain claims that the Latvian market, where Enlabs is the market leader, as well as the Estonian and Lithuanian markets, align with their expansion strategy. They plan to generate 100% of their revenue from locally regulated markets by the end of 2023. The outcome of these developments is yet to be seen.
Read also:
- Leipzig battles for top attacker Sesko.
- Fortuna determines to face relegation head-on.
- The insanely adventurous cycling route in Germany poses growing risks.
- Söder explores Rome with selfies.
Source: www.onlinecasinosdeutschland.com
