MGM Expected to Revive Entain Takeover Bid After UK Gambling Review

Summary

• MGM will likely pursue an Entain takeover as soon as the White Paper is published
• The casino giant previously failed in its attempt to acquire Entain for £8.1 billion
• Both companies have an existing joint venture in the US with BetMGM

MGM Resorts is expected to launch a fresh bid to acquire Entain Plc. once the UK Gambling Act Review White Paper is released.

According to a story on the Daily Mail’s financial news page This is Money, a takeover deal is inevitable, with analysts describing the potential consolidation of both companies as a “fairly obvious combination”.

MGM Eyes Entain Merger

MGM attempted to acquire Entain back in January 2021 for £8.1 billion but the Isle of Man-based gambling company rejected the offer, with Chairman Barry Gibson saying the bid “significantly undervalued” Entain’s business and prospects. MGM ended up withdrawing its takeover bid later that month citing limited engagement between both companies.

MGM and Entain have an existing partnership as they jointly own BetMGM, a sports betting and iGaming brand operating in the US. The two companies have been working together on this joint venture since 2020.

DraftKings also made an offer to acquire Entain for $22.4 billion after the latter knocked back MGM’s takeover bid but the deal fell through. The presence of BetMGM is believed to be among the main hurdles of any potential M&A deal between the two companies.

Entain owns more than 25 B2C brands in the online gambling industry, with a presence in 33 regulated markets across the globe. A successful acquisition deal would be greatly beneficial for MGM which is keen on expanding its global operations.

MGM Awaiting Results of Gambling Review

Since the UK is a key market for Entain, where it currently operates its flagship brands, Coral, Ladbrokes and Gala Bingo, any major changes to the country’s gambling regulations would have an impact on the business operations of the company.

The long-delayed White Paper could include stringent measures for the industry, such as affordability checks and additional advertising restrictions. The government may also give in to pressure and introduce a mandatory levy for research, education, and treatment (RET) funding.

These reforms will likely result in a significant drop in Entain’s shares, increasing MGM’s chances of taking full ownership of the gambling operator. MGM could make a higher offer this time, considering that Entain is now valued at £8.9 billion, £800 million more than MGM’s initial bid in 2021.

The Gambling Act Review White Paper is likely to be published in February, if there are no further hiccups.