Having fallen short with its attempt to buy its BetMGM co-owner Entain in a multi-billion-dollar deal last year, MGM Resorts International has turned its attention to Swedish iGaming company LeoVegas.
The hotel operator announced on May 2 it has offered around US$607 million for 100 per cent of LeoVegas’ shares, which was one of the first gaming operators to go live in Ontario’s new regulated online gaming market last month.
The LeoVegas board of directors has unanimously recommended the company’s shareholders accept the MGM offer, saying it represents a premium of approximately 44.1 per cent compared to the closing price of around US$4.28 on April 29, the last trading day before the offer was announced. Shareholders representing around 15.3 per cent of the company’s stock have already pledged to accept the offer, including CEO Gustaf Hagman, reports Covers.
If approved, MGM anticipates the deal closing during the second half of the 2022 fiscal year, although that will depend on the receipt of certain shareholder and regulatory approvals. That includes MGM securing the ownership of more than 90 per cent of LeoVegas shares.
“LeoVegas operates in an industry which is characterized by, inter alia, high innovation pace, new regulation and consolidation,” a press release from the LeoVegas board said. “In this context, the Board of Directors believes that the industrial logic and strategic fit between LeoVegas and MGM is attractive and should serve both the company and its employees well in the future.”
“Our vision is to be the world’s premier gaming entertainment company, and this strategic opportunity with LeoVegas will allow us to continue to grow our reach throughout the world,” MGM Resorts CEO and President Bill Hornbuckle said in a press release. “We have achieved remarkable success with BetMGM in the U.S., and with the acquisition of LeoVegas in Europe we will expand our online gaming presence globally.”
Writing on LinkedIn, Hagman said he sees “huge potential” in what LeoVegas and MGM could achieve together.
“Merging the two is a very exciting prospect. MGM Resorts has an ambitious agenda and financial muscles that would enable LeoVegas to grow quicker. Together we can make LeoVegas the largest iGaming brand in the world! Given these circumstances, I think MGM is a perfect partner – and that’s why I am supporting this offer.”
MGM is thought to be one of numerous suitors for LeoVegas, with the latter’s announcement noting it has “received several indications of interest or non-binding offers concerning a potential tender offer.” However, MGM’s offer is above what other parties are thought to be willing to pay.
MGM operates more than 30 hotels and casinos around the world, and splits ownership of BetMGM, another operator which is live in Ontario, 50/50 with Entain. The company ended up withdrawing its attempted buyout of Entain after the British gaming firm claimed the US$11 billion offer undervalued its shares and prospects.
LeoVegas was founded in 2011 and holds gaming licenses in eight jurisdictions, which are mostly European other than Ontario. It is mostly known for its online casino offerings, but also has a sportsbook powered by Kambi. According to Legal Sports Report, it gets about a quarter of its revenues from .com markets, including Latin America.
Analyst firm Regulus Partners suggested the deal could help MGM extricate itself from the BetMGM joint venture with Entain, noting that “by owning LeoVegas, MGM will clearly compete with Entain everywhere but the US. The three will also be going head-to-head in Canada.”