It has been a fun way to start the year as MGM Resorts International is looking to expand its base and acquire more properties. Their latest move towards world dominance was focused on acquiring Entain Plc, a UK-based company formerly known as GVC Holdings. Entain is the sportsbook operator that is housed by BetMGM, for its online gaming and sports wagering business. MGM Resorts International offered $11.06 billion to take over control of Entain but the owners have said that the figure is not adequate.
Entain’s decision
A pitch of $10 billion was made by MGM Resorts international to ENtain in the past, but that was turned away. The new offer was an upgrade and also offered 0.6 percent shares of BetMGM for each share of Entain. That offer meant that 41.5 percent of both companies will be owned by Entain. However, the UK-based company is not satisfied with the offer on the table on has rejected it again. The main reason for this rejection is because Entain believes it is being undervalued. Excerpts from a statement issued by Entain reads, “Entain has informed MGM that it believes that the proposal significantly undervalues the Company and its prospects. The Board has also asked MGM to provide additional information in respect of the strategic rationale for a combination of the two companies.”
Entain shares increased by 25 percent last year. Its stock is still growing as it ranked the best-performing member of the FTSE 100. It is perhaps, that continuous growth that is expected by the company is why they think they are being undervalued by MGM. Asides from the valuation problem, at this point, it is unclear if the company is interested in any takeover proposal. However, what is proposed by MGM will mean that Entain will stay on because they will continue to offer technology services. MGM simply wants the benefit that comes with the company’s well-known brand and in the same scoop, secure iGaming licenses in those locations.
Also, the proposal coming three months after a rival casino operator in the US, Caesars Entertainment Incorporated, opted to buy British sports betting giant, William Hill. In the same period, an offer was made by Flutter to increase its shares in the FanDuel group. Entain feels the offer is coming off the back of these acquisitions and is not comfortable with being undervalued by 7 percent. MGM, however, has cards to play if it is absolutely determined to complete the acquisition. In the case that other companies are interested in acquiring Entain, MGM has the upper hand whatever the situation.
No one is sure if another proposal will be sent to Entain as regards the takeover. Reports, however, suggest that MGM has the capacity to up its offer because of a heavy-weight investor in the company. Barry Diller’s IAC/InterActiveCorp made an investment last August to the tune of $1 billion. If MGM is to up their offer, the backing and financial resources of IAC can be of great help.
Entain will most likely be looking for a revised offer that will be beneficial to both companies. Its request for more information regarding the combination of the two companies is a clear indication.
