Why MGM Resorts fell 6% today

What happened

Actions of MGM Resorts International (NYSE: MGM) closed nearly 6% on Monday, after a joint venture partner revealed MGM was looking to acquire it.

So what

Partner of the MGM joint venture (JV) Entain (LSE: ENT) today revealed that MGM has made a takeover bid of approximately $ 11 billion. MGM and Entain – formerly GVC Holdings – are partners of the online sports betting and casino games application BetMGM. Entain said the offer, which is a 22% premium over the stock’s closing price last week, “significantly undervalues ​​the company and its prospects.”

Now what

Entain has confirmed that it has received several offers, so MGM appears to be ready to make the acquisition. Today’s drop in the share price indicates that MGM investors are betting the company will once again increase its bid for Entain, which also owns UK gaming brands Ladbrokes and Eurobet, among others. MGM’s offers come next Caesars Entertainment merged with Eldorado Resorts last year and announced plans to acquire a UK based oddsmaker William hill in an almost $ 4 billion deal.

BetMGM was launched in 2018 and offers sports betting and online casino games using technology from Entain and MGM’s casino brands. BetMGM today announced its launch in Iowa, marking its expansion into its eighth US state.

While MGM awaits a full takeover of its physical casinos, BetMGM is a business that is helping to drive growth. In addition to launching into states that have legalized sports gambling, BetMGM has added new partnerships with several professional sports teams. Long-term MGM investors should view today’s drop as an opportunity, while expecting the casino operator to increase its offering to try and place a growing segment entirely under its umbrella of company.