In the end, MGM Resorts International folded its cards rather than up its bid for British company Entain PLC.
After Entain rejected MGM’s initial offer of $11 billion, the Las Vegas-based casino company said January 19 it would not revise the offer, according to the Las Vegas Review-Journal. Entain’s board said the MGM offer undervalued the company’s worth. Entain, formerly GVC Holdings, operates several European online gaming brands including bwin, partypoker, Ladbrokes Coral and FoxyBingo.
“We interpret the news as Entain’s shareholders wanting much more than what MGM was willing to offer,” said J.P. Morgan analyst Joseph Greff in a note to investors.
The purchase would have given MGM complete ownership of Roar Digital—which oversees BetMGM sportsbooks—instead of the 50 percent share it now holds; Entain owns the other half. MGM and Entain expect to continue their partnership searching for ways to grow BetMGM.
BetMGM “remains a key priority,” MGM CEO Bill Hornbuckle said in a release. “We believe that BetMGM has established itself as a top-three leader in its markets and we remain committed to working with Entain to ensure its strong momentum continues as it expects to be operational in 20 states by the end of 2021.”
Last week, BetMGM announced plans to open a sportsbook at Nationals Park in Washington D.C., home of Major League Baseball’s Washington Nationals.
MGM’s decision to pull back its proposal came as a surprise; earlier this month, the company’s largest shareholder, IAC/InterActiveCorp., sent a letter of support saying it would back the deal with an investment of up to $1 billion.
“The opportunity was clearly supported by MGM’s largest shareholder and provided clear strategic benefits,” Jefferies gaming analyst David Katz said of the surprising move.
Macquarie analyst Chad Beynon said the decision to walk away reflects a desire to maintain a healthy balance sheet.
Still, in its release, MGM indicated it will still explore other opportunities should they come along.
Said Greff, “We think it is tough, though not impossible, for someone else to buy Entain given so much potential equity value coming from a 50/50 joint venture with MGM.”
Meanwhile, the CEO position at iGaming supplier Entain didn’t stay vacant for long. When Shay Segev surprisingly resigned earlier this month, in the midst of a major bid for the company from MGM Resorts, the search did not extend far from the company leadership structure. Jette Nygaard-Andersen, previously a director of Entain and an experienced hand at iGaming, was quickly named to succeed Segev, who will stay at Entain through July before joining sports-streamig company DAZN.
Barry Gibson, Enatain’s chairman, called Nygaard-Andersen a “ready made CEO.” She is just the fourth woman lead an FTSE 100 company.
A Danish national, Nygaard-Andersen headed up the esports team, Astralis, and had senior leadership roles at Modern Times Group, a Swedish media firm that also has e-sports interests.
“I am very excited to have the opportunity of continuing the extraordinary momentum that Entain has in its existing markets, as well as helping it enter new regulated markets and reach new audiences,” she said.
MGM Resorts last week said it would not make another bid for Entain once its $11 billion offer was rejected (see “iGaming” in this week’s GGB News). As a result, it’s expected that Nygaard-Andersen efforts will be to grow Entain, which has a 50-50 partnership on BetMGM, the online wagering arm of the casino giant.
In other Entain news, turnabout is fair play as shareholders with an 11 percent stake in Enlabs rejected Entain’s bid to purchase the company saying the offer undervalued Enlabs.
Entain offered Enlabs SEK 2.8 billion (US$336.3 million).
While the Enlab board recommended the deal, shareholders like Alta Fox Capital Management and Topline Capital opposed the offer, according to Gambling Insider.
