According to people with knowledge of the situation, the US gambling giant MGM Resorts International is willing to acquire the British gaming operator Entain PLC in the latest bid of the popular casino operator to boost its online gambling business.
As reported by a few individuals familiar with the matter, MGM Resorts recently approached Entain with a purchase bid that would have a considerable stock component.
The acquisition offer for the owner of the British gambling operator Ladbrokes which market value has been estimated at approximately $9 billion comes after an earlier all-cash bid of about $10 billion was rejected. According to the information provided by the people close to the situation, the new offer is set to be financially backed by IAC/InterActiveCorp, the most substantial shareholder of MGM Resorts.
For the time being, no further details about the proposed deal were unveiled. The exact value of the new bid was not revealed either, but analysts believe that the acquisition bid’s price is above the £12.85 per share at current exchange rates that was offered to the British gambling company by MGM late in 2020. Even with the offer being larger than the previous one, there is still no guarantee that Entain will say yes to the new acquisition bid so that a deal is reached.
If an agreement is reached, it would be another significant chance for Entain PLC, which has been known as GVC Holdings until recently, in a relatively short period of time. It would also come as another fine example of the ongoing consolidation in the gambling sector worldwide, after Caesars Entertainment Inc.’s recent acquisition of the UK gambling operator William Hill, which already has a joint venture with the US market rival of MGM Resorts. The deal got the approval of Caesars’ Shareholders and is now expected to be officially finalized in March 2021.
Gambling Companies Worldwide Seek Consolidation in the Light of Coronavirus Pandemic
The proposed purchase would end up combining one of the biggest gaming companies on a global scale, with the operator having a significant presence in the high streets and online. Such a move would follow the wave of consolidation that has already started in the industry in the light of new market conditions and the coronavirus pandemic that has affected the performance of both big and small gambling companies worldwide.
Like the rest of the industry, MGM Resorts has also been under pressure lately because the still ongoing coronavirus pandemic forced it to close its hotels and casinos on the Las Vegas Strip, which have been its biggest money-making operations, or keep them operational at a very low capacity for much of 2020. Meanwhile, the online gambling sector was seen as a chance for recovery. Online gambling has already been very successful before the pandemic and the coronavirus outbreak just gave it an additional boost, which has turned out to be helpful for the majority of gambling companies that had an online presence along with their brick-and-mortar operations.
All this has pushed casino companies worldwide, such as MGM Resorts, to reorganize and strengthen their businesses as quickly as possible, often through acquisition and partnership agreements.
For the time being, online gambling generates a relatively small portion of MGM Resorts’ revenue. However, with the massive closures across the land-based gambling sector on a global scale, casino and betting operators have seen online gambling as an opportunity to continue working even with the strict social distancing and stay-at-home measures associated with the pandemic. And, according to experts, the trend toward digitalization of the sector is not expected to reverse anytime soon.