OFFER WITHDRAWN: MGM PLAYING HARDBALL, OR ENTAIN OVERVALUING ITSELF?

US casino giant MGM Resorts International has withdrawn its proposal for the acquisition of British gambling group Entain (formerly GVC Holdings). 

MGM’s offer valued Entain at approximately $11B USD, offering 0.6 shares for each Entain share, which would have left its shareholders with 42% of the company. However, as previously reported, Entain said MGM’s offer significantly undervalued the company and its future prospects. 

Although MGM had until 1 February to submit a revised proposal and InterActive Corp (IAC), its largest shareholder, had backed the acquisition and offered to contribute $1B to support it, the company has now withdrawn its offer and indicted it will not be submitting another.

Interestingly, despite Entain and MGM collaborating on the BetMGM venture in the United States, MGM is reported to have cited limited recent engagement between the companies as one of the reasons for withdrawing the offer. 

Earlier this month, Entain CEO Shay Segev announced his resignation, and is now serving his six-month notice period before joining global sports OTT platform DAZN. In a statement, he said that his decision to leave Entain had not been influenced by MGM’s acquisition proposal. 

As reported last week, Jette Nygaard-Andersen, who is already on the Entain board as a non-executive director, is in talks to replace Segev. 

AYO.NEWS says:

Is MGM just playing hardball or does it genuinely believe Entain is overvaluing itself?

As we mentioned a couple of days ago, when reporting that a major US shareholder of Enlabs had rejected Entain’s own acquisition offer – saying it significantly undervalued the company and its prospects – it could well be that gambling companies are significantly overvaluing their own prospects, failing to acknowledge an approaching confluence of negative factors like the general economic crisis sparked by COVID-19, increasingly restrictive regulations, changing demographics, and saturation in many markets.

If we had to bet, we’d say MGM will be back with a different offer – maybe not substantially larger, but more attractive. 

‘AYO.NEWS says’ features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited or its affiliates or associates. 

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