Entain Rejects MGM Resorts' C$14B Takeover Offer
Updated January 12, 2021
MGM Resorts International's (MGMRI) C$14 billion (US$11 billion) takeover offer for Entain, formerly operating as GVC Holdings, has been rejected on the grounds that it "significantly undervalues the company and its prospects." MGMRI has indicated its largest shareholder would be willing to help fund a deal.
Entain confirmed news of the offer and announced it had turned down the bid. Noting that MGMRI would offer 0.6 MGMRI shares for each Entain share, and assessing closing prices on December 31, 2020, the statement concluded that Entain believes the proposal comes in below what would be a reasonable price.
Under the terms of the proposal, Entain shareholders would own approximately 41.5 per cent of the enlarged MGMRI. MGMRI has indicated that a limited partial cash alternative would also be made available to Entain shareholders. The company has asked MGMRI for further details about its rationale pertaining to the offer and its valuation of Entain's eassets.
In the meantime, Entain added in a note to its investors that a further announcement will be made as appropriate. However, the statement advised investors to take no action on the bid in its current form. “There can be no certainty that any offer will be made for the company, nor as to the terms on which any such offer might be made,” it concluded.
Subsequently, on January 8, MGMRI indicated its largest shareholder, IAC/InterActive Corp., was committed to investing up to US$1 billion into the casino company’s effort to acquire Entain, whihc is one of Europe’s largest online gaming conglomerates.In its letter of intent, IAC said the proposed MGM Resorts-Entain combination is "compelling" and gave five points of reasoning which emphasized the benefits of the potential merger.
Then, days later, Entain CEO Shay Segev announced he is quitting the gambling firm after just seven months in the role to join global sports streaming platform DAZN as co-CEO. He said MGM’s approach had no bearing on his decision to leave.
“This changes nothing with respect to the Board’s view of the recent proposal from MGM Resorts International to acquire Entain,” Chairman Barry Gibson said.
Entain and MGMRI are currently partners in the U.S. market with BetMGM, a rival to industry-leading offerings DraftKings and FanDuel.
On Monday, January 4, MGMRI had issued a statement in response which said "MGM believes both its proposal and the strategic rationale for the combination are compelling and looks forward to engaging with Entain on this basis.
"In particular, the company believes that a combination with Entain would:
- Deliver full control of the BetMGM business to leverage the rapidly growing U.S. iGaming and sports betting opportunity
- Position the company as a global gaming company across both online and retail with a leading end-to-end technology stack
- Expand and diversify the company's operations, product offerings and earnings
- Position the combined company for future growth and investment by leveraging its leading brands, leading technology platform and strong balance sheet
MGMRI concludes that despite the reports and Entain's statement, "there can be no certainty that any offer will be made for Entain."
Entain is the owner of brands including Coral, Ladbrokes, Bwin, PartyPoker, SportingBet, Gala Bingo, Eurobet, and Betboo. SBC notes a merger would give MGM Resorts a wider online sports betting presence and enable the casino firm to keep pace with its rivals.
Caesars Entertainment is set to acquire William Hill plc, while Flutter Entertainment is increasing its stake in FanDuel.
These moves are thought to be inclining MGM's leadership to make similar strides in the flourishing sports betting market.