Las Vegas-based gaming and hospitality company MGM Resorts announced Tuesday it would not proceed with a firm bid for Entain PLC after having its latest proposal worth $11 billion rejected.
All-Stock Bid Swiftly Rejected
MGM Resorts offered an all-stock deal to Entain shareholders in which each share at the Isle of Man-registered gaming group would be exchanged for shares at MGM at a ratio of 0.6, in a deal totaling £8.09 billion ($11 billion), but the target company responded that the proposed 22% premium undervalued the company.
“…after careful consideration and having reflected on the limited recent engagement between the respective companies regarding MGM’s rejected all stock proposal at an exchange ratio of 0.6x, it does not intend to submit a revised proposal and it will not make a firm offer for Entain plc.”Official Statement, MGM Resorts
A merger with Entain would have switched control at BetMGM, MGM Resorts’ and Entain’s sports betting joint venture brand in the US, entirely in the hands of the US gaming and hospitality operator in a moment when legalization of sports wagering gathers speed nationwide and more and more states allow their residents to wager in house, instead of seeing funds flowing out to neighboring states or offshore operators.
Bring Technology and Expertise In House
MGM’s approach to Entain is the latest in a trend of business combinations between European sports betting companies and US-based casino operators related to the expanding sports betting market in the US.
As European firms possess the technology and expertise since sports betting became a hot topic on the other side of the Atlantic only after the US Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) in May 2018, their prospective US counterparts offer scale and market access.
MGM’s attempt to buy out its sports betting partner followed in the footsteps of Caesars Entertainment, which tabled a £2.9 billion all cash deal for the UK-based sports betting operator William Hill to bring technology in house, and shareholders of the UK entity accepted the proposed price.
Earlier last year, the other major European gaming group with significant presence in the US, Flutter Entertainment, completed the acquisition of Canada’s The Stars Group (TSG).
While being targeted by MGM, Entain is seeing his tabled bid to acquire Baltic gaming company Enlabs AB in tatters after a second large minority shareholder of the firm vowed to block the significantly undervaluing the company £250 million bid from Entain.
Entain is also on the market for a new chief executive officer after current CEO Shay Segev surprisingly announced his departure after less than 6 months at the helm.