Entain Rejects MGM’s $11.1 Billion Takeover Offer

Entain says try again

MGM Resorts International has made an £8.1 billion ($11.1 billion) offer to buy online gaming company Entain (formerly GVC Holdings), but Entain says it is not enough. On Monday, the owner of partypoker confirmed publicly that MGM did, in fact, receive a proposal from MGM, but that it “significantly undervalues the Company and its prospects.”

According to Entain, MGM’s offer was for 0.6 MGM shares for each Entain share. According to the stocks’ closing prices on December 31, which was the last trading day before the offer, the offer valued Entain at 1,383 pence per share (the company is traded on the London Stock Exchange), a 22% more than Entain’s closing price. That’s seems like a healthy premium, but Entain isn’t having it

The deal would also put 41.5% of the new, combined company’s shares in the hands of Entain’s shareholders, so MGM would maintain control.

Entain’s stock price skyrocketed on the news of MGM’s offer, jumping from a December 31 close of 1,133.50 pence to a January 4 close of 1,420 pence.

It sounds as if Entain’s concern is not entirely about the price, adding in a press release, “The Board has also asked MGMRI to provide additional information in respect of the strategic rationale for a combination of the two companies.”

MGM and Entain know each other well

Entain does not have the name recognition that MGM does, but anyone who has played poker or gambled online is well aware of the company’s brands. As the owner of partypoker, Ladbrokes, Coral, sportingbet, bwin, and more, it is one of the biggest online gaming companies in the world.

The two companies do already have a relationship, so there are certainly (warning: business buzzword incoming) synergies at play in any possible merger. MGM and Entain created the US-facing online gambling company BetMGM in July 2018, which is primarily a sports betting business. Also in the BetMGM “family” are partypoker, PartyCasino, and Borgata Online.

BetMGM is currently live in nine states, including Colorado, Indiana, Iowa, Mississippi, Nevada, New Jersey, Pennsylvania, Tennessee, and West Virginia.

Iowa revving up

Iowa is the newest state for BetMGM. On Monday, the company launched its mobile sports betting app in conjunction with Dubuque’s Diamond Jo Casino. While Iowa is not a particularly large market, it is one that should grow fairly quickly. When online sports betting first launched in August 2019, the regulations included the ridiculous restriction, requiring customers to register their online accounts in person at a casino.

That mandate would naturally suppress registrations in a normal year, but in 2020 with the COVID-19, it was an even bigger problem. With lockdowns, casino closures, and an overall massive decrease in indoor entertainment patronage, the regulation served to really put a damper on the growth of the Iowa sports betting industry.

But that restriction lifted on January 1, bringing with it multiple new online options for Iowa bettors, including BetMGM.

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