As the Entain group—formerly GVC Holdings and owners of iconic British bookies Ladbrokes and Joe Coral—rejects an £8.09bn (US$10.97bn/€8.95bn) takeover offer from US gambling giant MGM Resorts International (MGMRI), the new iGaming decade kicks off with a bang — not a Covid whimper.
The move on Entain has all the hallmarks of the recent £2.9bn (US$3.93bn/€3.21bn) acquisition of William Hill by Caesars Entertainment:
Cash-rich US gaming giant sees the future. The future is digital and online sports betting; said giant buys-in, and then buys out, state-of-play British expertise.
The MGMRI action is surely only the opening salvo in a campaign that seemingly has only one outcome. It’s not a question of if, but when and how much?
It promises a year of change, consolidation and super-charged activity for the world’s iGaming verticals.
Based on the 2020 year-end value of Entain shares, of 1,383 pence per share, the initial MGM Resorts’ bid represented a 22 per cent premium to Entain shareholders.
The rejected proposal offered 0.6 of an MGMRI share for each Entain share, which would have seen Entain shareholders owning just over 41 per cent of the merged companies – with a limited cash sweetener thrown in.
But the board of Entain has shot back that the offer “significantly undervalues the company and its prospects.”
Under British takeover rules, MGMRI now has until close-of-business February 1 to up its offer.
For the moment both sides–although already closely allied in a 50-50 sports betting and iGaming venture in the United States, BetMGM, since July 2018—are playing their cards close to their respective chests.
BetMGM is very much alive and kicking; already operating in seven US states, with expansion planned for Virginia and Michigan within weeks and a total investment to date of close to US$450m (£332m/€367m).
Industry watchers say MGMRI’s move on Entain–which also owns Bwin, PartyPoker, SportingBet, Gala Bingo, Eurobet and Betboo–is prompted in great part by the need to further challenge leading iGaming rivals DraftKings and FanDuel.
With the news of the potential takeover, Entain’s shares surged 26.2 per cent on London’s FTSE100 on Monday, the day’s top performer.
This, undoubtedly, is one to watch.