MGM confirms ‘compelling’ proposal for Entain shares

US casino giant MGM Resorts International has confirmed that it has proposed a merger with its US sports betting and igaming partner Entain plc, but has refused to say if a firm offer to acquire the company will follow.

It has also been confirmed that the offer consists of 0.6 MGM shares for each Entain share, representing a value of 1,383 pence per share and a premium of 22% to the company’s share price.

This values the firm at around £8.1bn, and MGM has also indicated that a partial cash alternative could be made available to Entain’s shareholders. Under the terms of the offer, Entain shareholders will retain around 41.5% of the combined company.

Furthermore, MGM’s largest shareholder, IAC, has suggested that it could potentially fund a portion of a partial cash alternative through further investment in MGM.

Although Entain has stated that it believes the proposal undervalues the company – which operates several international gaming brands including Ladbrokes, Coral, Bwin, PartyPoker , SportingBet, Gala Bingo, Eurobet and Betboo – it did also issue a request for further information.

MGM has responded, saying that it believes “both its proposal and the strategic rationale for the combination are compelling,” adding that a combination would position the company as a global gaming operator in both the online and retail sectors and would provide greater leverage in the burgeoning US market.

Furthermore, the firm said that a merger would also expand and diversify the company’s operations, product offerings and earnings; and position the combined company for future growth and investment by leveraging its brands, technology platform and strong balance sheet.

However, it was also asserted in the statement that “there can be no certainty that any offer will be made for Entain”.

The American hospitality and entertainment giant has provided no further comment on the proposed Entain buyout at this time, but has revealed that its sports betting app has made its debut in Iowa, in conjunction with Diamond Jo Casino.

Iowa is the eighth state in which the BetMGM mobile app is available statewide, along with Nevada, New Jersey, Colorado, Indiana, Pennsylvania, Tennessee and West Virginia.

Adam Greenblatt, CEO at BetMGM, commented: “I can’t think of a better way to kick off the new year than by launching BetMGM in Iowa, a state well known for its passionate sports fans.

“Our connection with MGM Resorts enables BetMGM users in the Hawkeye State to earn rewards, from hotel suites to dinners at award-winning restaurants, all while engaging in the excitement of our cutting-edge sports betting experience.”

Analysts say that the cooperation between Entain and MGM could pose a serious challenge to the dominant FanDuel and DraftKings brands as the US sports betting industry continues to expand.

US stock market investors have been taking increased interest in the US sports betting sector over the past year, putting pressure on MGM to strengthen its position in the market, particularly following Caesars Entertainment‘s acquisition of leading British gambling operator William Hill.

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