MGM Resorts International won’t make an additional offer to acquire United Kingdom-based Entain PLC, its partner in sports betting operator BetMGM, the company said Tuesday.
An $11 billion proposal by MGM Resorts was rejected earlier this month by Entain as being undervalued and asked for additional information on the merger’s strategic rationale.
In a brief statement, MGM said it decided not to submit a revised proposal or firm offer for Entain, “after careful consideration and having reflected on the limited recent engagement between the respective companies regarding MGM’s rejected all-stock proposal.”
MGM Resorts and Entain – formally known as GVC Holdings – each own 50% of Roar Digital, which oversees sports betting operator BetMGM, which operates retail and/or mobile sports betting in 11 states.
MGM Resorts CEO Bill Hornbuckle said the companies remain committed to expanding BetMGM throughout the U.S. Last week, BetMGM announced plans to open a sportsbook at Nationals Park in Washington D.C., home of Major League Baseball’s Washington Nationals.
“We believe that BetMGM has established itself as a top-three leader in its markets and we remain committed to working with Entain to ensure its strong momentum continues as it expects to be operational in 20 states by the end of 2021,” Hornbuckle said.
J.P. Morgan gaming analyst Joe Greff said in a research note that ending pursuit of Entain doesn’t change MGM’s ability to “secure equity value” from the growing U.S. sports betting and igaming market.
“We interpret today’s news as Entain’s shareholders wanting much more than what MGM was willing to offer,” Greff said.
Jefferies gaming analyst David Katz said MGM Resorts has maintained “financial flexibility” to pursue “other growth opportunities,” such as further investment in its Macau operation and pursuing a gaming license in Japan.
“Although we believe full ownership of the digital enterprise is strategically and operationally important, the commitment to disciplined capital allocation is taken as a positive for MGM,” Katz told investors.
Entain operates several European online gaming brands, including bwin, PartyPoker, Ladbrokes, Coral, and FoxyBingo.
MGM Resorts’ largest shareholder, IAC/InterActiveCorp, which is controlled by billionaire media mogul Barry Diller, was behind the push to acquire Entain. MGM Resorts said IAC would fund “a portion of the partial cash alternative” due to its “confidence in MGM and its prospects.”
IAC spent more than $1 billion last summer to acquire a 12% stake in MGM Resorts. Diller, who is IAC’s chairman, and company CEO Joey Levin are now members of MGM’s board.
IAC called the proposed MGM Resorts-Entain combination “compelling,” citing five different bullet points highlighting the benefits from the merger.
Shares of MGM Resorts, traded on the New York Stock Exchange, closed $30.53 Tuesday, up 73 cents or 2.45%.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
