Posted on: July 28, 2023, 01:29h.
Last updated on: July 28, 2023, 01:29h.
Though the gains of have been erased, shares of Kindred Group (OTC: KNDGF) surged early in Friday’s trading session amid speculation that MGM Resorts International (NYSE: MGM) is considering acquiring the Swedish gaming company.
Referring to a Betaville alert, which cited unidentified sources, Seeking Alpha reported that MGM and an unnamed UK-based gaming entity are considering acquiring Kindred. The logical choices for the UK company are believed to be Flutter Entertainment parent company FanDuel (OTC:PDYPY) and Entain Plc (OTC: GMVHY).
Entain is a sensible choice due to recent deal-making activities. However, if both Entain and MGM are interested in acquiring Kindred, it could create tension between the BetMGM partners. Neither company has confirmed their interest in Kindred publicly, nor has Flutter.
Kindred Is On the Block
While there is speculation about potential suitors for Kindred, it was announced in April that Kindred is evaluating strategic alternatives, including a potential sale.
Since then, several top executives have left the company. Despite this, Kindred has been buying back its own stock, leading analysts to believe a sale may be imminent.
Rumors of MGM’s interest in Kindred emerged in May, which aligns with Keith Meister’s Corvex Management’s involvement in considering corporate action for Kindred. Meister is also a director at MGM.
In addition, MGM has a modest track record of acquisitions in Sweden, having acquired LeoVegas AB for $607 million last year.
Similarly, reports in May indicated that Kindred had preliminary discussions with Entain, Evolution AB, and Flutter regarding a potential transaction.
Kindred Is Affordable
With a market capitalization of $2.59 billion, Kindred is an attractive target for potential acquirers. The extent of MGM and Entain’s pursuit of Kindred, if any, is intriguing because there is speculation that MGM could revisit a takeover of its BetMGM partner.
An acquisition of Entain would be much more expensive for MGM compared to acquiring Kindred. The same could be true if MGM were to buy out BetMGM’s owner, Coral.
During the company’s recent second-quarter earnings conference call, Kindred executives confirmed that the strategic review is ongoing and progressing as expected. The company’s near-term focus is on gaining market share and managing costs.