Entain Shares Soar After Rejecting MGM Takeover Bid

Entain Shares Soar After Rejecting MGM Takeover Bid

Sports betting group Entain has seen its share price increase by 31.2% over the past week after it reject an $11.1 billion takeover bid from MGM Resorts. The offer represented a 22% premium on the group’s valuation at the time. However, Entain said the MGM bid significantly underestimated the value of the company’s shares and future prospects, and the board requested more details on the strategic rationale behind a merger.

Entain was known as GVC Holdings until it rebranded last month. It is based in the UK, listed on the London Stock Exchange and owns Ladbrokes, Coral, Bwin, Sportingbet, Foxy Bingo and various other brands. Entain and MGM Resorts have a 50/50 joint venture called BetMGM, which is bidding to become the market leader in the burgeoning US sports wagering industry.

It has all the hallmarks of Caesars Entertainment’s takeover bid for William Hill, which was approved by William Hill shareholders in November. William Hill, which is also based in the UK, built up a market-leading position in Nevada and expanded into most states with legal sports wagering. It tied up a partnership with Caesars – formerly Eldorado Resorts before it acquired Caesars – to expand across the country. It then received a £2.9 billion ($3.7 billion) bid from Caesars, which threatened to pull out of the US partnership if William entertained a rival offer from a private equity firm.

Shades of the William Hill Deal

William Hill shareholders voted to approve the cash offer from Caesars, whereas the Entain board held firm. However, it could end up agreeing to a sale if MGM comes back with an improved offer. Shares in Entain increased 26% after it rebuffed the bid, and they continued to climb throughout the course of the week.

Entain said it had informed MGM that it believes that the proposal “significantly undervalues the company and its prospects”. Its statement added: “The board has also asked MGMRI to provide additional information in respect of the strategic rationale for a combination of the two companies.” Under market rules, MGM has until 5pm UK time on February 1, 2021, to make a new offer or it must walk away. Entain said MGM has already made multiple offers to buy the business.

In the meantime, business continues as normal for the group. It has just put forward a $340 million bid to buy Enlabs, which operates sports betting brands in the Baltics. “The acquisition of Enlabs is perfectly aligned with our strategy of expanding across new regulated international markets,” said chief executive Shay Segev. “We are hugely excited by the growth opportunities it presents both in its existing markets and through new market opportunities. Enlabs is already a strong and rapidly growing business in its own right, but we now have a fantastic opportunity to turbocharge its growth by leveraging the power of our unparalleled proprietary technology, scale, product and marketing expertise.”

Entain’s proprietary technology and sports betting expertise made it an attractive partner for MGM in the US market. British bookmakers saw great potential in the US market after the Supreme Court overturned the federal sports wagering ban, PASPA, in May 2018. They have made aggressive moves to capture market share, but they could now find themselves swallowed up by US gaming giants like Caesars and MGM, which are keen to diversify.

Get Big or Get Taken Over

The prevailing mantra in 2021 could be: get big or get taken over. Flutter Entertainment, which owns Paddy Power, Betfair and various other brands, has thus far been the most successful European operator in terms of cracking the US market. It purchased a controlling stake in popular DFS brand FanDuel in the immediate aftermath of the Supreme Court decision, and it has since turned FanDuel into the market leading online sportsbook in most states.

It then tied up a $6 billion takeover of Canadian firm The Stars Group, which owned PokerStars and operated the FOX Bet brand. That deal formed the world’s largest online gaming group, so Flutter does not currently appear to be in any danger of being taken over. DraftKings merged with white-label sportsbook provider SBTech and a special purpose acquisition company before listing in New York, and it is also in a strong position to compete with Caesars-William Hill and MGM-Entain. We could see more consolidation occurring in 2021 as firms battle to dominate this potentially lucrative market.

New York Wants to be a Part of It

The prize is clear. The U.S. has the potential to become the world’s largest sports betting market by a considerable margin. More than half of the 50 states have now legalized sports wagering in one form or another. New Jersey, Nevada, Pennsylvania, Illinois, Indiana, Colorado, Tennessee and several other large states already have flourishing online sports betting markets, but the future growth potential remains vast.

The three largest states – California, Texas and Florida – have not yet legalized sports betting. The fourth largest state, New York, only permits sports wagering at a handful of remote, land-based venues. The market could grow exponentially if all four eventually legalize online sports wagering. They are currently losing revenue to neighboring states, so there is a clear motivation for them to jump aboard the bandwagon.

The New York Daily News reports this week that Gov. Andrew Cuomo is planning to include online sports betting in his 2021 budget. Right now New Yorkers head over the border to New Jersey or visit offshore sites for online sports betting. Cuomo has previously resisted calls to legalize online sportsbooks in the state, but he has now finally changed his tune as a result of the financial strain that the Covid-19 pandemic has placed upon New York.

“At a time when New York faces a historic budget deficit due to the COVID-19 pandemic, the current online sports wagering structure incentivizes a large segment of New York residents to travel out of state to make online sports wagers or continue to patronize black markets,” said Cuomo said in the report. However, he added: “We want to do sports betting the way the state runs the lottery where the state gets the revenues. Many states have done sports betting but they basically allow casinos to run their own gambling operations. That makes a lot of money for casinos but it makes minimal money for the state. And I’m not here to make casinos a lot of money. I’m here to raise funds for the state. So we have a different model for sports betting.”

  • William Hill Casino

    $500 Risk Free Bet

    To be eligible for this Promotion, all eligible Patrons must place their first real money sports wager via the William Hill mobile app or desktop site, within 7 days of opening a William Hill NJ Account. If their Qualifying Wager is graded as a Loss the Participant will earn a one-time Free Bet token equal to the lessor of: 1) The full value of the Qualifying Wager or 2) $500 (“Free Bet(s).
  • 888 Sport

    $500 Welcome Bonus

    Player must be at least 21 years old, located in New Jersey, has completed the full registration process with us.888sport.com, makes a first deposit equal to or greater than $10 and may be entitled to a Welcome Bonus of 100% up to $500 on the players first deposit at us.888sport.com.
  • Bet America

    Bet $50 Get $50 [code: BET50]

    Join BetAmerica today for an exclusive Bet $50 and Get $50 using code [BET50] on your next sports bet. Register today and enjoy our Freeplay contests where you can use your sports and casino knowledge to win $1000's in prizes every week.
  • Unibet Sportsbook

    Play Now

    Join Unibet Sportsbook today and once you add funds, we'll insure your first cash bet - get up to $500 back if you don't hit a winner. Make your first cash bet on any event. If your first settled cash bet loses, you will receive a refund to your account equal to the amount of your losing wager (up to $500). Your first cash bet ($10 or over) will qualify. You will receive the refund within 72 hours.
  • SugarHouse

    100% Up To $250 Deposit Match Bonus

    Player must create a new account, make a first deposit up to $250 to get a Deposit Match Bonus. Use code 250MATCH.
  • Caesars

    $1,001 Free Bet

    Make your first deposit and we will match your first sports bet up to $1,001! Cash bet must have minimum odds of -200. On Parlay wagers, each legs must have odds of -200 or greater.
  • FanDuel Sportsbook

    $1000 Risk Free Bet

    New Sportsbook Customers Only. Join FanDuel Sportsbook today and make your first bet. If you lose, we'll give you a refund of up to $1,000 in site credit (within 72h). Your first bet will qualify (If you have multiple selections on one betslip, it will be the first selection you made)
  • Draft Kings Sportsbook

    Get a deposit bonus up to $1,000!

    Join Draft Kings today and with your first deposit of $5 or more, start earning towards a deposit bonus of $1,000. A user’s first deposit (min. $5) made before 02/27/2022 qualifies the user to receive up to $1,000 in bonus funds in the form of site credits that can only be used on DraftKings. Bonus amount is equal to 20% of that deposit amount, not to exceed $1,000 (the user must deposit $5,000 to be eligible to receive the maximum possible bonus amount of $1,000).

Latest news

Betting news, tips, offers and more