MGM Resorts shareholder IAC ready to invest US$1 billion in Entain acquisition
MGM and Entain Could Become Global Gaming and Entertainment Leader
Media and internet company IAC/InterActiveCorp vowed to help MGM Resorts International in its bid to acquire British online betting firm Entain PLC. The US media giant, founded by Barry Diller, boasts a 12% stake in the global gaming operator and is willing to increase it, thus providing MGM with capital for a higher offer.
A few days ago, the Las Vegas-based casino operator launched a takeover bid of $11.06 billion for Entain, its partner on the BetMGM iGaming and sports betting business. The British bookmaker confirmed rumours about the offer and said the amount substantially undervalues the company.
According to the latest proposal, Entain stakeholders would receive 0.6 shares in MGM for each share of Entain’s own shares, meaning Entain investors would end up with 41.5% of the combined company.
There has not been any subsequent offer yet. But MGM said it’s possible that IAC, its largest investor, might invest in the casino giant in order to help it acquire Entain. In August last year, Diller’s company obtained $1 billion stake in MGM, equivalent to 59.03 million shares, or a 12% stake.
In a press release confirming receipt of the support letter from IAC/InterActiveCorp, MGM highlights IAC’s position on the deal:
“The future of gaming will be omni-channel, and the long-term winners in global gaming will deliver customers compelling digital and physical experiences under one brand and loyalty program and will leverage customer acquisition spend across a holistic consumer journey in gaming.”
IAC to Support Expansion of MGM Regardless of Takeover Outcome
IAC adds that the merger could leverage each company’s local geographic and operational expertise in new markets. On one hand, MGM boasts a large asset base, as well as a leadership position in Las Vegas, China and seven key regional markets in the USA.
On the other hand, Entain’s physical footprint in the UK and Europe, its leading technology platform and its digital presence in the UK, Germany, Belgium, Italy, Brazil and more than 15 other countries could enhance the combined company’s market opportunities.
According to UK regulations, MGM must either confirm that it is making a second bid for Entain, or that it gives up on the idea until 5 p.m. local time on February 1. The deadline can be extended subject to prior approval.
In the letter of intent, IAC says the global gaming market is valued at $450 billion, and it will support MGM’s ongoing efforts to increase its market share regardless of the outcome of the takeover bid.