Potential Woes for Entain May Prompt Another Takeover Bid by MGM

Latest News: MGM Resorts International Eyes Entain Plc Amidst Tepid Forecast

Posted on: September 26, 2023, 06:29h

Last updated on: September 26, 2023, 06:29h

The recent decline in market capitalization of Entain Plc following a lackluster 2023 net gaming revenue forecast has sparked speculation of a potential takeover bid from MGM Resorts International. This decline in value is expected to make Entain more receptive to a potential offer from MGM, should they choose to make one.

Entain Avid
A Ladbrokes betting shop in the UK. Owner Entain could draw another takeover bid from MGM Resorts. (Image: Bloomberg)

Despite a rebound in shares of Entain, its current market capitalization is significantly lower than that of MGM Resorts International. This makes Entain a potentially attractive acquisition target for MGM, given their previous failed bid in January 2021. MGM now has the opportunity to acquire Entain at a lower price, offering a significant premium while paying less than their previous offer.

The recent decline in Entain’s market value also wipes out most of the gains made during the COVID-19 pandemic, further highlighting the potential appeal for MGM to make another bid for their BetMGM partner.

The relationship between MGM and Entain is currently a 50/50 partnership on BetMGM, one of the leading online sportsbook and iGaming operators in the US. While MGM expressed reluctance to bid for Entain in the past, recent developments may change their stance. Entain is facing regulatory issues in the UK and experiencing sluggish growth in Australia and Italy, which adds to its vulnerability.

The latest news exacerbates a downward trajectory that has seen Entain shares halve in value since October 2021. But it also creates an opportunity for MGM Resorts International, who seeks to have more control over the U.S. sports-betting joint venture with Entain.

Rumors have circulated in the past about MGM potentially buying out Entain’s BetMGM stake, which would be a more cost-effective option than a complete takeover. However, there has been no official confirmation of such discussions or whether Entain would be open to this possibility.

Entain Vulnerability Forecast

Investors have warned that Entain’s missteps could make it susceptible to a takeover bid by MGM or another interested party. Eminence Capital, a major investor in Entain, had previously expressed concerns over Entain’s acquisition of a Polish sportsbook operator. Additionally, some shareholders may regret not accepting previous takeover bids, including the offers from MGM and DraftKings.

As it stands, both MGM Resorts International and Entain face significant challenges and opportunities, making the potential for a takeover bid all the more compelling.

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