19 Jan

MGM Walks Away from Entain M&A

MGM won’t pursue UK iGaming giant Entain after rejected bid.

Since the turn of the calendar, the online gambling industry’s headlines have been alight with the news that Las Vegas-based MGM Resorts International was looking to buy out the UK’s largest online gambling firm, Entain. This week, the story came to an abrupt close when MGM confirmed that, following Entain’s outright rejection of a proposed $11 billion bid, the Vegas casino corporation is done pursuing that route.

The multi-billion takeover bid would have seen MGM taking majority control of Entain, with 42% ownership of shares. The stock market and its so-called experts were all for it. Shares were on a steady rise as market analysts applauded the idea. But MGM’s offer would have valued the stock at 0.6 per share; a figure the UK company felt was grossly undervalued.

MGM Won’t Pursue UK iGaming Giant Entain

Bloomberg reports MGM Resorts issued a statement on Tuesday confirming its decision to back off the deal, following “careful consideration and having reflected on the limited recent engagement between the respective companies regarding MGM’s rejected all-stock proposal.”

MGM would have benefited greatly from an Entain M&A, giving them profitable access to the UK’s largest internet gambling operations, Ladbrokes, Coral and Gala. More importantly, it would have allowed MGM, and its mobile betting platform, BetMGM, the ability to tap into Entain’s considerable knowledge of the online betting industry.

UK gambling companies have been operating online sportsbooks and casinos for decades; practically since the dawn of the internet. In the US, online gambling has been largely prohibited, so much so that American casino corporations saw no value in the pursuit of iGaming. That all changed in May 2018 with the repeal of PASPA. For the first time in over 25 years, US states (outside Nevada) were given the right to regulate legal sports betting operations; not just retail sportsbooks at land-based casinos, but online and mobile sportsbooks, too.

This dramatic change in US law led to an abundance of US gambling corporations seeking M&A deals with UK companies. The two primary goals are 1) market share, and 2) expert knowledge of iGaming operations.

M&As Between US and UK Firms

Some of the biggest name sin the business have already struck deal with overseas colleagues. In May 2020, Flutter Entertainment Plc, the Ireland-based operator of major iGaming brands like Paddy Power, Betfair, Partypoker and Bwin, completed the $12.3 billion acquisition of Canada’s The Stars Group, owner of PokerStars and BetStars. Later that year, MGM’s biggest hometown rival, Caesars Entertainment Inc., scooped up the UK’s William Hill Plc for $4 billion.

It as believed MGMs takeover of Entain would be the third big US-to-UK buyout in the iGaming industry since the legal sports betting boom began, but such is not to be. MGM is done looking at Entain, but they’re not done looking. The company said it “will maintain a disciplined framework while evaluating a range of compelling strategic opportunities” moving forward.

Goodbody says Good Times Ahead for Entain

As for Entain, Goodbody analyst Gavin Kellher said, “It’s been a rocky month” for the UK iGaming giant. “But all told, everything that’s happened since Dec. 31, I think there’s more positives with Entain than negatives.”

Shares were down 20% with this morning’s news, and their head honcho, CEO Shay Segev, is on his way to out to take the reigns at DAZN. On the bright side, Entain has managed to secure its fair share of the US betting market. And there’s always room for more M&A talks down the road, with or without MGM at the negotiating table.