Posted on: September 9, 2022, 07:42h.
Last update on: September 9, 2022, 07:42h.
Since early 2021, when MGM Resorts International (NYSE:MGM) offered the company more than $11 billion, Entain Plc (OTC:GMVHY) is seen as one of the industry’s top takeover targets of the game, but the owner of Ladbrokes considers himself more of a hunter. than prey.
Later in 2021, merger talks between Entain and DraftKings (NASDAQ:DKNG) dissolved after the latter launched a $22.4 billion cash and stock offering after previously offering $20.5 billion. dollars. After fending off the barbarians at the door, Entain CEO Jette Nygaard-Andersen sees her company positioning itself more as a buyer than a seller.
We are not a business for sale,” she said in a Bloomberg interview. “I am very focused on growing this business. I consider Entain to be the consolidator.
His comments could dash hopes that MGM would return to the negotiating table with a high offer for partner BetMGM. The two gaming companies each control 50% of what is the number one iGaming provider in the United States and one of the largest online sports betting operators.
CEO of Entain Walking the Walk
As for Entain’s position as a buyer and not a target, Nygaard-Andersen backs that claim up with plenty of action.
This year, the owner of Coral is in the process of making deals himself, acquiring at least five game companies for over $1 billion combined. Last month, Entain announced the acquisition of 75% of Croatia-based SuperSport Group. In February, Entain announced that it was paying nearly $235 million to acquire Deis Ltd., the parent company of Avid Gaming. This is an effort to strengthen its footprint in the newly liberalized sports betting market in Canada.
These are just two examples, but these trades highlight the fact that if Entain was actively buying himself, he probably wouldn’t be buying himself.
The operator’s shopping spree serves another purpose. With the added weight and potential share price increases, Entain becomes more expensive for MGM or any other suitor. Some analysts think it would take at least a 20% premium to its current market capitalization to bring Entain to the trading table, but that price, due to the stock’s decline this year, is lower than what MGM was previously offering and less than half of DraftKings’ offerings. .
What’s next for the Entain/MGM relationship
MGM executives have made it clear that they would like to have full control of BetMGM. It is not in the realm of possibility that this dream can come true, but the casino operator should make an attractive offer to interest Entain.
Even that might not be enough for the UK-based game company. In the Bloomberg interview, Nygaard-Andersen grew optimistic for the 2022 American football season and amid a regulatory crackdown in its home market, the geographic diversification attributable to BetMGM’s involvement is compelling for Entain and its shareholders.
While undoubtedly less than the outright acquisition price of Entain, buying it from BetMGM wouldn’t be cheap due to the sportsbook operator’s growing market share and the fact that it’s approaching profitability.