MGM confirms Entain merger proposal

MGM has confirmed it put forward an offer to acquire the online gambling operator Entain. 

MGM Resorts International has confirmed that it made an offer to acquire the online gambling giant Entain, formerly known as GVC Holdings.

However, the US gambling giant said it could not yet confirm whether it will make a firm bid to acquire Entain.

MGM’s bid for Entain

Yesterday, Entain revealed that MGM Resorts put forward a proposal to acquire the Ladbrokes operator with 0.6 MGM shares for each share in Entain. Based on closing prices from 31 December 2020, this would amount to 1,383 pence per Entain share and would value the business at $11bn (£8.11bn).

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.

On top of this, InterActive Corporation, MGM’s largest shareholder, has indicated it would potentially fund a portion of the partial cash alternative through a further investment in MGM.

Entain revealed that it believed the bid “significantly undervalues” the business, however, in a statement MGM outlined why it believed the deal would be a smart move for the operator.

MGM claims the deal will provide Entain with “full control of the BetMGM business to leverage the rapidly growing US iGaming and sports betting opportunity” and position the business as a global gaming company across online and land-based verticals.

MGM also said that this would diversify the business’s offering and position the combined group for future growth.

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.

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

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