IAC/InterActiveCorp must have a lot of money at its disposal. According to the latest wrinkle in the saga of MGM Resorts International’s quest to purchase Entain PLC, the casino giant said on January 8 that its largest shareholder could commit as much as $1 billion to complete the acquisition.
Entain, a large European online gaming concern, has rejected an $11 billion offer, claiming MGM undervalued the company. For the record, Entain and MGM are 50-50 partners in Roar Digital, which operates the BetMGM sportsbook.
According to CDC Gaming Reports, IAC spent more than $1 billion last summer to acquire a 12 percent stake in MGM Resorts. The investment put Barry Diller, IAC’s chairman, and company CEO Joey Levin, on the MGM board.
“IAC notes… that it continues to strongly support this objective for MGM whether or not a transaction with Entain is consummated,” MGM said in a statement. But the statement concluded by noting that IAC finds the acquisition “compelling.”
Diller, in a letter to IAC shareholders last summer, said the MGM “presented a ‘once in a decade’ opportunity to own a meaningful piece of a preeminent brand in a large category with great potential to move online. IAC has always been opportunistic with its capital, and if ever there was a time, this moment is unique.”
Diller had this to say in U.K.’s Financial Times: “It would be great if MGM could do this with Entain but whether it happens or not, I am skeptical and if it doesn’t, I am sanguine. I am absolutely sure we will be in a leadership position whatever.”
The terms and amount of such investment would require agreement of both IAC and MGM according to Inside Asian Gaming.
Entain runs bwin, partypoker, Ladbrokes, Coral, and FoxyBingo betting sites.
The discussions over the sale come as Entain CEO Shay Segev threw a curveball by tendering his resignation more five months into the top job. Segev will leave the former GVC to head sports streaming platform DAZN. Entain Chairman Barry Gibson said the company could not match the offer DAZN promised, according to Legal Sports Report.
The question on everybody’s mind: how will Segev’s decision impact the MGM-Entain discussions? Gibson indicated the loss of Segev will have no impact on the potential deal.
Segev, who will remain in his current role for six months unless a replacement is found, said the MGM deal did not factor into his decision, according to Reuters.
In a note issued January 11, Jefferies analysts said, “We think MGM may now be more encouraged to opportunistically raise its bid. We see at least a £16.50 (US$22.47) take-out valuation for Entain, circa 20 percent higher than MGM’s £13.83 proposal.”
In related news, the drama unfolding between Entain and MGM has not stopped the former from making other inroads. Entain has offered £250 million (US$340.1 million) to acquire Optibet operator Enlabs.
Enlabs focused on online sports betting and iGaming brands across the Baltics, with a retail component as well, according to iGaming Business. Last November, Enlabs acquired Global Gaming, which expanded its operations through the Nordics with brands including Optibet, Laimz and Ninja Casino.
Entain said Enlabs fits its strategy of establishing a presence in local regulated markets. Enlabs’ brand and Entain’s scale, proprietary technology, product, marketing and regulatory expertise, could propel further growth and expansion.
If the purchase goes through, Entain would retain Enlabs board chairman Niklas Braathen. In addition, Braathen will invest €15 million (US$18.2 million) into shares in Entain within four months, based on the offer.
Once a deal is accepted by Enlab shareholders and regulatory approvals are received, the purchase could close by the end of the first quarter.
“Enlabs is already a strong and rapidly growing business in its own right, but we now have a fantastic opportunity to turbocharge its growth by leveraging the power of our unparalleled proprietary technology, scale, product and marketing expertise,” outgoing CEO Segev said.
Braathen said: “Entain’s experience and track record in many different geographic markets, together with its market-leading proprietary technology and world-class marketing skills are key attractions for Enlabs as we look to grow in the Baltics and beyond.”
