On Sunday Entain PLC (formerly GVC Holdings) issued a statement after press speculation following news which emerged in the Wall-Street Journal that MGM Resorts International (NYSE:MGM), operator of Bellagio Casino had made a ten billion dollar offer for the company in 2020, which was rejected. Entain rejected the offer on the basis that it considered that the offer undervalues the company.
Today MGM confirms it made a new $11.06 billion takeover bid for Entain Plc (OTC:GMVHY), which MGM is currently in partnership with on the BetMGM venture. In rejecting the new, $11.06 billion pitch, Entain asked MGM to clarify what its strategic rationale is for the offer.
In response to the request, MGM says that it “believes both its proposal and the strategic rationale for the combination are compelling and looks forward to engaging with Entain on this basis.”
“We believe MGM’s pursuit of Entain is a smart, strategic effort that would allow BetMGM to maximize return on investment (ROI) on customer acquisition across multiple channels,” said Union Gaming analyst John DeCree in a note to clients. “It would also give BetMGM direct access to MGM’s fortress balance sheet that offers more efficient capital for growth”. MGM stated that a combination of the two companies would deliver full control of the BetMGM business to leverage the rapidly growing US igaming and sports betting opportunity; as well as position the company as a global gaming firm across both online and retail.
Entain shares rallied 25 percent last year, and if that rally continues any prospective buyers will have to pay a large price for the British company.
In a statement to the media it was said: “Under the terms of the proposal, Entain shareholders would own approximately 41.5 per cent of the combined company. The company has also indicated that a partial cash alternative could also be made available to Entain shareholders.
Tom is a Sports and iGaming Journalist living in the USA.