MGM targets $607m takeover of LeoVegas to move igaming vision beyond US shores

The board of LeoVegas AB has ‘unanimously recommended’ to investors an SEK 61 (€5.90) cash-per-share takeover offer submitted by US casino and entertainment group MGM Resorts.

Publishing deal terms this morning, LeoVegas has advised shareholders to accept MGM’s offer, which has placed a 44% premium on the firm’s SEK 42.3 (€4.10) closing price on the Stockholm Nasdaq as of Friday, 29 April. 

The bid values LeoVegas’ enterprise at approximately SEK 5,957 million – $607/€580 million, in which the transaction will be paid through MGM’s existing cash reserve.

The transaction sees MGM execute its first igaming-specific M&A outside of US shores, in which it deemed LeoVegas as imperative to its plans to establish a ‘globally-scaled and dominant’ online gambling business. 

“We have achieved remarkable success with BetMGM in the US, and with the acquisition of LeoVegas in Europe we will expand our online gaming presence globally.” – Read a statement by MGM President Bill Hornbuckle. 

“We believe that this offer creates a compelling opportunity that allows the combined teams of MGM Resorts and LeoVegas to accelerate our global digital gaming growth and fully realise the potential of our omnichannel strategy. We look forward to being able to welcome the LeoVegas team to our MGM Resorts family.”

Of strategic importance, MGM will acquire LeoVegas business that operates across eight European licenced jurisdictions, combined with the firm’s expert management team that has built the firm’s proprietary mobile-first tech platform that services its multi-brand portfolio covering all igaming disciplines.  

The deal was further branded as ‘profit effective’ for the future development of MGM’s online gambling business as LeoVegas generated €393 million in corporate revenues and €48 million in adjusted EBITDA during the last twelve months ending 31 March 2022.

MGM outlined its confidence in executing its deal as it had obtained an ‘irrevocable undertaking’ by company founder and Chief Executive Gustaf Hagman alongside further senior investors representing 15% of LeoVegas’ outstanding shareholding to sell the business upon recommended terms. 

“MGM values the skills and talents of LeoVegas’ management and employees and intends to continue to safeguard the excellent relationship that LeoVegas has with its employees.” – read LeoVegas’ board recommendation to investors. 

“Given MGM’s current knowledge of LeoVegas and in light of current market conditions, MGM does not intend to materially alter the operations of LeoVegas following the implementation of the Offer, subject, of course, to MGM’s continued regulatory review. There are currently no decisions on any material changes to LeoVegas’ or MGM’s employees and management or to the existing organisation and operations, including the terms of employment and business locations.”

The board of LeoVegas will announce an acceptance period for the offer that is expected to commence around 3 June 2022 and expire on or around 30 August 2022.

Industry analysts will be monitoring deal developments closely, as to how MGM will choose to further develop its online gambling business – in which it has firmly secured a US wagering ‘podium place’ through its successful BetMGM sportsbook joint-venture with FTSE100 Entain Plc.  

The subsequent takeover of Entain has long been mooted for MGM to take full control of its US wagering proposition.  Yet, in 2021, Entain rejected an $11 billion deal, as corporate governance deemed MGM to have ‘significantly undervalued future prospects’.

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