MGM seeks purchase of Ladbrokes owning entity

The exact details and value of the new offer could not be learned, but it is above the £ 12.85 – or $ 17.56 at current exchange rates – a share MGM had offered at the end of last year, people said. There is no guarantee that Entain will be receptive to the new offer or that there will be an agreement.

A combination could create one of the few major gaming companies in the world with a significant online and brick-and-mortar presence. This would follow another recent consolidation in the industry.

Like its peers, MGM has been under pressure as the coronavirus pandemic has kept its biggest producers – casinos and hotels on the Las Vegas Strip – closed or operating at greatly reduced capacity for much of the year.

The online gaming market, meanwhile, was already booming before the pandemic gave it a further boost. This has prompted casino operators like MGM to pivot their businesses even faster than expected, often through partnerships and acquisitions.

MGM currently derives a small portion of its income from online betting, which casinos have long viewed as a threat, but which they increasingly see as an opportunity, as people are socially far from home and the pandemic pushes away. slot machines and blackjack tables. The trend towards online gambling is not likely to reverse anytime soon.

Entain, known until recently as GVC Holdings, is one of the largest games companies in the UK after securing a roughly $ 5 billion deal that brought Ladbrokes under its roof in 2018. Its shares have increased recently as the pandemic has brought online gambling to the fore. The Las Vegas-based MGM has a market value of around $ 16 billion and is best known for its casino properties which include the Bellagio and the Mirage.

Barry Diller’s internet conglomerate IAC became MGM’s largest shareholder in August, revealing a roughly 12% stake then valued at around $ 1 billion. He said at the time that he planned to work with the company to expand its online gaming business. Mr. Diller, IAC President and CEO Joey Levin, has also joined the MGM Board of Directors.

Another of its major shareholders, Corvex Management LP, also sits on the board of directors of activist hedge fund founder Keith Meister.

Caesars Entertainment Inc.

CZR 0.79%

recently struck a roughly $ 4 billion deal to buy UK-based William Hill WMH 0.30%

PLC, which already has a joint venture with rival MGM. Caesars shareholders applauded the deal, with its shares ending the year up about 25%. The transaction is expected to close in March.

Investors, meanwhile, have piled up in companies with the potential to be major players in the growing online gaming market, particularly in the United States. Inc.

DKNG -4.88%

and Penn National Gaming Inc.,

PENN -0.83%

for example, climbed almost 340% and 240% in 2020, respectively.

DraftKings went public in April through a transaction with a blank check company and a merger with a small gaming technology provider simultaneously. In early 2020, Penn National took a significant stake in Barstool Sports Inc., a closely-owned company, in a deal that gave it the exclusive rights to use the media company’s brand in its sports betting products.

MGM’s shares ended the year down around 5% while Entain’s closed up around 30%, perhaps a nod to its potential as a buyout target.

The management teams of MGM and Entain have existing links. Since 2018, they have become exclusive partners on BetMGM, a small and growing online gaming company recently funded by both parties. BetMGM, which uses Entain’s technology and MGM’s licenses and brands, operates in more than 10 states, including Nevada, New Jersey and Indiana. He plans to be in over 20 by the end of this year.

Write to Cara Lombardo at [email protected]