The second UK firm targeted by a US casino brand giant comes under the watchful eye of the casino industry as MGM Resorts attempts its £8.1 billion acquisition of UK firm Entain formerly known as GVC Holdings.
In the midst of the rejected bid, shares in Entain rocketed by 26% on the FTSE 100 Index, which pretty much makes the original MGM bid null and void for the time being. When MGM Resorts made their original offer, the deal was that MGM will give 0.6 shares for every Entain share, which would mean shareholders of Entain would effectively control 42% of the MGM Resort’s shares. On 31 December Entain shares were at 1,132.50 GBX on the FTSE, and by 4 January when the stock markets opened today at 8 am shares rose to 1,440.00 GBX and at the time of this writing (mid-day) UK the Entain shares rose to 1,465.36 GBX.
That said, rising stock prices were not the primary reason for the bid rejection. Nation said that the offer undervalued the real value of the company and the company would like to see more strategic plans in regard to MGM Resort’s future plans. It is perhaps a combination of stock prices and company value rising, which the company may or may not have already been aware of, and a lack of information provided with the bid.
Also, £8.1 billion does seem a little underwhelming when considering previous acquisitions deals such as the Amaya Gaming takeover of PokerStars for roughly £3 billion, the recent takeover of NetEnt worth £2 billion, and Caesars Entertainment taking over William Hill for £2.9 billion. These takeover deals were for a single brand name. This is where it gets ‘underwhelming’ because Entain operates multiple brands under its flagship name and these brand names are no small fish compared to the likes of PokerStars, William Hill, and NetEnt so you have to ask where is the value for Entain?
Entain Controls Multiple Brands
Some brands under the Entain name within the iGaming industry include Partypoker, Partycasino, CasinoClub, Gioco Digitale, Cashcade, Foxy Bingo, and Foxy Games. In the sports betting sector, there are also several big brand names to consider such as Ladbrokes Coral, Bwin, BetMGM (partnership), Sportingbet, Betboo, Gamebookers, VistaBet, and Neds.
What MGM Resorts is asking for is multiple established brands for a mere £8.1 billion. With or without stock prices rising, the original offer appears low.
How Would the MGM Resorts Bid affect Live Casino Gamers?
As with many of these takeover bids, that is all they are. A takeover that maintains original deals and partnerships where there is no conflict of interest. For the likes of Playtech Live which has an agreement with Ladbrokes to provide live dealer games via its omnichannel while both Evolution and Playtech are operational at Party Casino, there should be no dramatic changes.
Evolution and Playtech are also already in operation with BetMGM in New Jersey and Pennsylvania so the relationships amongst the live dealer manufacturers, BetMGM, and Entain are already strong.