MGM Resorts International could be getting ready to make a second takeover offer for Entain Plc, its partner company in the BetMGM joint sports betting venture. The US casino giant will gain total control of BetMGM if it completely buys out Entain.
If MGM is to succeed with a potential second Entain bid, they will certainly have to come with a bigger offer than the $11.06 billion deal they proposed back in January. Entain rejected that offer on the grounds of it being inadequate; MGM stated after that it wasn’t considering raising its offer. In line with UK Law, MGM was unable to make any more takeover proposals for the six months that followed. Those six months ended on July 19. According to present exchange rates, MGM’s first offer was equivalent to a share price of $19.03. However, between January and now, Entain’s share price has gone up, closing at $25.05 at the end of the second week in July.
MGM hasn’t released any official statement regarding a second bid. But going by the continued rise of the USA online casino market, – and BetMGM’s revenue figures this year – it is hard to look past them being interested in a second offer. BetMGM’s total revenue in 2021 Q1 was reported to be $163 million, a massive 430% increase on its 2020 first-quarter revenue. The operator also expects to realize $1 billion net revenue from its operations in 2022.
Initial Entain Bid From MGM
Back in January, London-listed gambling company Entain rejected an $11 billion takeover offer from MGM Resorts International, its sports betting partner. According to details of the offer, the bid was set to be funded largely in MGM stock, which would have seen Entain hold 41.5% of the enlarged venture. It was also reported that MGM offered a ‘limited partial cash alternative’.
In a company statement released after the deal was rejected, Entain said: “Entain has informed MGMRI that it believes that the proposal significantly undervalues the Company and its prospects. The board has also asked MGMRI to provide additional information in respect of the strategic rationale for a combination of the two companies.”
MGM – Entain Relationship
If there is a successful agreement between MGM and Entain this time around, one notable point of intrigue will be how the former handles Entain’s global exposure. The English firm’s top-notch technology powers sports betting operations in much of Europe and Australia, as well as parts of Latin America. MGM has a known bias towards operating with an asset-light model, so if a deal goes through, it might want to offload non-US brands such as Ladbrokes, Coral, and Bwin to an interested buyer.
Back in April, MGM and Entain, alongside their joint venture BetMGM, hosted an investor day event. The virtual event was set up to offer insights into BetMGM’s iGaming and sports betting operations in the US. It included presentations from BetMGM Chief Executive Officer Adam Greenblatt, as well as Chief Financial Officer Gary Deutsch. (PRNewswire, 2021)
Greenblatt, speaking a few months ago about the future of BetMGM and MGM’s partnership with Entain, said: “The US market is shaping up to be even larger and more exciting than we originally envisaged, and we now believe it will be worth $32 billion, including Canada gambling revenue. Furthermore, the outstanding progress that the team has made so far means that we now expect to achieve a 20-25% US market share long term. The unique partnership of MGM Resorts’ leading brand and loyal customer base and Entain’s proprietary technology platform gives us the best resources to win in this market.” (PRNewswire, 2021)
BetMGM Partnership with Pittsburgh Pirates
BetMGM recently also entered into sports betting partnership with the Pittsburgh Pirates that’ll see the sportsbook’s branding appear at Pittsburgh’s PNC Park. The partnership with the baseball franchise will also involve fan-focused promotions and digital content on the team’s social media platforms.
Chief Revenue Officer Matt Prevost, speaking on the partnership, said: “BetMGM has seen tremendous success in Pennsylvania since launching in December 2020. Growing our presence across the state, in partnership with the Pirates, is a top priority and we look forward to providing Pittsburgh’s passionate fans unique promotions and benefits only available on BetMGM.” (Yahoo! Finance, 2021)
The new deal is just one of the many symbols of the incredible rise of BetMGM within the iGaming sphere, as the operator continues to gain more market share. The brand’s impressive progress will definitely be a crucial consideration in any potential new deal between its joint owners.
Sources
PRNewswire, 2021
PRNewswire, 2021
Yahoo! Finance, 2021
MLB, 2021
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