Gaming Report: MGM Resorts International is Reportedly Exploring Ways to Win Over Entain After Latter Rejects $11.1 Billion Takeover Bid

2021 saw its first significant gaming acquisition bid relatively early in the year with Las Vegas-headquartered MGM Resorts International making an $11.1 Billion (£8.1 Billion) takeover offer for Entain Plc – formerly known as GVC Holdings. While news of the offer skyrocketed Entain’s shares, the company rejected the offer criticizing the terms that it said significantly undervalued its business.

MGM has not given up the pursuit yet and is reportedly looking at ways to sweeten the deal to win over Entain that owns online poker brand partypoker, and runs the betting site Bwin. If the takeover bid comes through, it will give rise to one of the biggest gambling companies in the world.

Entain enjoys a significant presence in Europe’s online betting market and has been strategically increasing its presence in the US. In fact, MGM happens to be Entain’s US partner for online casino and sports betting since 2018.

For now, Entain’s Board has reportedly asked MGM to provide additional strategic reasoning for the merger, and MGM has been working on fine-tuning its initial proposal. As per UK Takeover Law, MGM Resorts can officially announce its intention to make a formal offer until 5 PM on February 1 or withdraw altogether.

The Offer

MGM Resorts has made an all-cash offer for the erstwhile GVC Holdings that rebranded to Entain in November last year. Just as 2021 began, MGM followed this up with a better all-stock bid. Entain that owns online poker brand partypoker and runs the betting site, Bwin, confirmed on Monday that it had received an offer of 0.6 MGM share for each of its own, equivalent to 1,383 pence a share.

According to media reports, this represented a 22% premium to Entain’s last closing price before the offer. Entain’s shares jumped on the UK blue-chip index by 28% after the buyout bid news broke out.

Unlike Caesars Entertainment that acquired UK-based bookmaker William Hill for $3.7 Billion (£2.9 Bn) last year and indicated it might sell the latter’s betting shops in the UK, MGM clarified that the combined entity would not do away with the famous Entain-owned Ladbrokes betting shops.

However, Entain turned down the proposal, stating that it “significantly undervalues” its business. The company board has not entirely turned out the possibility of a merger with MGM and has asked the latter to “provide additional information in respect of the strategic rationale for a combination of the two companies.”

MGM & Entain – Shared Ties

MGM and Entain have shared a business equation since July 2018, when the two companies entered an agreement that allowed Entain – then GVC Holdings – to enter the US market for online casino and sports betting. Together they set up ROAR Digital that operates the sports betting platform BetMGM. Last July, both companies committed to the second round of investment in BetMGM.

MGM has off-late made a series of asset sales, growing its balance sheet to nearly $4.6 Billion in cash. The company’s biggest shareholder Barry Diller’s IAC (InterActiveCorp), has indicated that it may partly contribute to the takeover by investing more in MGM and increase its stake in the company from the current 12%.

Entain Plc has a significant presence in the UK and runs more than 3,300 high street betting shops across the country. The fact that Entain Plc shares have climbed up 28% in the past year makes this acquisition an attractive prospect for MGM Resorts International.