MGM has confirmed it made an offer to acquire Entain but added it could not confirm if it will make a firm bid to merge its British partner. The latest development comes days after Entain announced that it received the $11.1 billion takeover proposal by its US casino partner, which Entain (formerly known as GVC Holdings) said undervalued its business. According to MGM, Entain then asked MGM to provide additional information with regard to the strategic rationale for a merger of the two entities. The two entities are now discussing options, but there is no certainty that any firm offer will be made.
MGM Resorts International made an all-cash offer late last year for Entain and again more recently made a higher, all-stock bid. However, both times, Entain dismissed the terms for being too low to consider. The discussion now includes potentially making it a more enticing offer by including a mix of cash and stock, according to the insiders who preferred not to be named because the deliberations are private.
Entain said the offer, representing a 22% premium over its closing price in December, “significantly undervalues” its shares and prospects. In response, MGM said it is aware of the announcement made by its partner in the US sports betting and online gaming market. The US casino company confirmed that it had proposed an offer of 0.6 shares for each Entain share, which, based on the closing price of December 31, represents a value of 1383 pence per Entain share, besides a premium of 22% to Entain’s share price.
This values the UK firm at around $11.1 billion, and MGM has also indicated a partial cash alternative could be extended to Entain’s shareholders. Under the terms, Entain’s shareholders will retain approximately 41.5% of the combined company. In addition, IAC, MGM’s largest shareholder, has said it would fund a portion of the partial cash alternative via a further investment in MGM.
Entain Still Interested
Despite indicating indifference to MGM’s latest offer, Entain has issued a request to its American partner to provide further information. MGM has responded by saying that “both its proposal and the strategic rationale for the combination are compelling.” The casino operator also said that combination would position the merged company as a global gaming operator in both retail and online sectors, providing greater leverage in the ever-growing US market.
Furthermore, MGM said that a combination would also expand and diversify the provider’s operations, product offerings, and earnings. It will also position the merged company for future growth and investment by leveraging its technology platform and strong balance sheet. However, MGM also stated that there could be no finality that any offer would be made for Entain.
The London-listed Entain operates various international gaming brands, including Ladbrokes, Bwin, Coral, PartyPoker, Gala Bingo, SportingBet, Eurobet, and Betboo.
Finally, MGM said it would not prefer to comment any further on the proposed offer or other rumors or speculation.