MGM Resorts International has ended its bid to acquire British sports betting and iGaming giant Entain PLC.
The company issued a statement on Tuesday (Las Vegas time) in which it said that “after careful consideration and having reflected” upon its initial all-stock offer to take control of Entain – which was quickly rejected – it does not intend to submit a revised offer.
MGM had previously proposed an offer of 0.6 MGM shares for each Entain share, believed to value the latter at around US$12.9 billion and representing a premium of 22% on Entain’s current share price. Under the terms of the proposal, Entain shareholders would have owned approximately 41.5% of a combined company.
A partial cash alternative had also been mooted although not pursued, despite MGM Resorts shareholder IAC/InterActiveCorp supporting the move and pledging to invest up to US$1 billion to make it happen.
Entain remains MGM’s joint venture partner in rapidly expanding US sports betting brand BetMGM, with MGM CEO Bill Hornbuckle stating Tuesday that the partnership is still a “key priority for the company as we continue to leverage our preeminent physical gaming, entertainment and hospitality platform to expand digitally.
“We believe that BetMGM has established itself as a top three leader in its markets and we remain committed to working with Entain to ensure its strong momentum continues, as it expects to be operational in 20 states by the end of 2021.”
The decision not to further pursue acquisition of Entain is good news for Osaka, where MGM, alongside its local partner Orix, is the sole bidder to develop an integrated resort.
It had been suggested by brokerage Sanford C Bernstein that ploughing such extensive resources into Entain would “reduce MGM’s appetite for a large-scale Japan development that the company has been pursuing in Osaka,” and that, “MGM may wind up backing away from a Japan integrated resort or reducing its partnership stake.”
MGM China shareholder Snow Lake Capital also called on MGM Resorts to sell off some of its majority stake in the Macau casino operator to either a leading Chinese consumer internet company or a travel and leisure company, suggesting the funds raised could help it maintain an interest in both Entain and the Osaka IR opportunity.
It now appears that neither acquiring Entain, nor the sale of MGM China shares, are on the table.