MGM Offers $11B for U.K. Gaming Firm Entain

The owner of Ladbrokes rebuffed the proposal, saying it "significantly undervalues the company and its prospects."
Matthew HellerJanuary 4, 2021

Casino operator MGM Resorts has offered about $11 billion to acquire the owner of British bookmaker Ladbrokes in a move to expand its reach in the booming online gaming market.

MGM’s offer for Entain, which owns online gaming brands and more than 3,300 betting shops, comes just a few months after rival Caesars Entertainment bought William Hill for $4 billion.

Entain confirmed Monday it had received multiple proposals from MGM, with the latest one for 13.83 pounds per share implying a deal value of 8.09 billion pounds ($11.08 billion) and representing a 22% premium to the last undisturbed closing price.

But Entain said it had informed MGM that “it believes that the proposal significantly undervalues the company and its prospects.” In trading Monday, the stock closed at 14.16 pounds.

MGM’s offer “adds up to a big bet for a company with a market value of $16 billion — but there is hope [that] with backing from its largest shareholder, IAC/InterActiveCorp, the casino operator will be able to bring more to the table,” The Wall Street Journal said.

As the Journal reports, MGM “has been under pressure as the coronavirus pandemic kept its biggest moneymakers — casinos and hotels on the Las Vegas Strip — closed or operating at sharply reduced capacity for much of the year.”

The online gaming market, however, has continued its rapid growth as COVID-19 restrictions encourage locked-down customers to gamble from home. While overall U.S. gambling revenue was down 33% in the first 10 months in 2020, revenue from sports wagers, most of which are made online, rose 39%, according to the American Gaming Association.

“The sports betting market in the U.S. is going crazy,” Darin Oliver, managing director of the gambling advisory business Simply Alpha Capital, told The Guardian.

MGM and Entain teamed up in 2018 to form BetMGM, a joint venture that offers online sports betting and casino games in the growing number of U.S. states where it is legal.

Nicholas Hyett, an equity analyst at Hargreaves Lansdown, told CNN Business he “can understand why MGM wants to take control” of Entain but cautioned that a higher price “may prove too much for MGM shareholders to swallow.”

Photo: Edwardx, via Wikipedia, CC BY-SA 4.0