MGM’s largest shareholder pledges up to $1bn towards Entain acquisition

MGM’s largest shareholder has pledged up to $1bn to get the deal with Entain done.

MGM Resorts International’s largest shareholder, InterActive Corp (IAC), has offered to contribute up to $1bn towards the US casino giant’s bid to acquire Entain.

This comes after Entain revealed last week that MGM made an offer to acquire the online gambling giant.

MGM’s bid to acquire Entain

Last week, the UK-based operator 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).

Entertain rejected the offer as it believed the US casino giants’ bid “significantly undervalues” the business and its growth prospects.

Following this news, MGM’s largest shareholder has pledged $1bn to get the deal done.

IAC pledges $1bn to get the deal done

In a statement, IAC said it would be willing to offer up to $1bn towards the cash offer put forward by MGM in order to improve the US operator’s bid for the company. IAC has specifically offered to help fund the partial cash alternative part of the MGM offer.

MGM’s largest shareholder said it could offer the funds as a reflection of its confidence in MGM and the deal. 

IAC owns roughly 12% of MGM after it invested an initial $1bn in the company in August 2020.

What does IAC see in the deal?

IAC believes that the acquisition will position “the combined company as a pure-play omni-channel global leader in gaming and entertainment” and will align incentives surrounding BetMGM and its future growth.

The shareholder also believes that the acquisition will allow for the sharing of knowledge from different legal gambling jurisdictions around the world. 

IAC also said that the deal would improve the balance sheet and free cash flow, allowing the combined business to “aggressively pursue its growth objectives such as US online market penetration, new development in key international gaming markets, future M&A and returning capital to shareholders.”

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