MGM Resorts International has raised its bid for Entain PLC in a ￡8.1 billion (US$11.1 billion) deal that would be the largest in a recent wave of trans-Atlantic betting mergers.
Entain said the offer undervalues the company.
The proposed deal, which would give the Las Vegas casino operator broader access to fast growing online betting markets, offers Entain investors 0.6 of a share of MGM for every share they hold, London-based Entain said in a statement yesterday.
MGM might also offer a “limited partial cash alternative” to shareholders, and would own about 42 percent of the combined company.
At ￡13.83 per share, the bid is a 22 percent premium to Entain’s closing share price on Thursday. The company’s shares jumped 27 percent at 8:06am in London.
The gaming industry is undergoing a wave of consolidation after the US legalized sports betting in 2018.
Las Vegas-based casino giant Caesars Entertainment Inc is taking over the UK’s William Hill PLC, while Flutter Entertainment PLC, headquartered in Dublin, is buying a stake in FanDuel that would give it almost full control of the US bookmaker.
MGM, the largest casino operator on the Las Vegas Strip, formed a joint venture in 2018 with Entain, formerly known as GVC Holdings PLC, to capitalize on the growth of online betting in the US.
The partnership got off to a slow start as the venture had some disagreements over strategy.
A merger would consolidate control of the company’s online betting operations at a time when the industry is seeing dramatic growth. The US sports betting market alone is expected to quintuple in size to US$8.4 billion by 2024, the consulting firm Vixio Gambling Compliance said.
“We think that the market has not yet recognized the upside potential and momentum in Entain’s joint venture,” Jefferies LLC analyst James Wheatcroft said in a note to clients yesterday.
If the market valued the British company at the same level as its US peer, DraftKings Inc, Entain could expect a valuation of about ￡19.75 per share, he said.
Entain has asked MGM for more details on the strategic rationale on the combination and has asked shareholders to take no action.
Entain shares gained 28 percent last year, giving it a market value of ￡6.6 billion.
MGM shares fell 5.3 percent last year.
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