Entain confirms talks with MGM Resorts over potential merger

Entain has revealed that MGM Resorts put forward a proposal to potentially acquire the business.

Entain, the online gambling giant formerly known as GVC Holdings, revealed that its US joint venture partner MGM Resorts International put forward a proposal to potentially acquire the business.

MGM’s offer

According to Entain’s statement, MGM Resorts’ most recent proposal would offer 0.6MGM shares for each share in Entain and based on closing prices from 31 December 2020, this would amount to 1,383 pence per Entain share. This represents a 22% premium on Entain’s share price.

Under the terms of the proposal, Entain shareholders would own approximately 41.5% of the enlarged business. MGM also indicated that a limited partial cash alternative would be made available to Entain shareholders.

However, Entain has informed MGM that it believes the current proposal “significantly undervalues the company and its prospects.” Entain’s Board has also asked MGM to provide additional information in respect of the strategic rationale for a combination of the two companies.

Entain noted that there was no certainty an offer would be made and there was no indication as to what the terms of a potential bid would look like. The Ladbrokes operator also noted it had confirmed the talks without agreement or approval from MGM.

It is not entirely clear if MGM intends to make another offer to combine its business with Entain’s.

Under Rule 2.6(a) of the City Code on Takeovers and Mergers, MGM must make a firm intention to bid for Entain by 5pm on 1 February or the business must announce it does not intend to make an offer.

MGM and Entain

MGM Resorts and Entain have worked closely together since July 2018 when they entered into a 50-50 joint venture to form the US-focused online gambling brand BetMGM.

Both companies intended to capitalise on sports betting and online gambling opportunities in the US via the joint venture.

In July 2020, both operators committed to a second round of investment in BetMGM which brought the partners’ total investment in BetMGM to $450m.  

At the time of writing, BetMGM currently operates in seven US states and is set to launch its mobile and online sportsbook in Virginia and Michigan early this year.

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