Entain has rejected a bid from its U.S. joint-venture partner MGM Resorts International valuing the group at $11bn.
MGM’s offer valued Entain shares at $18.80 based on the last day of trading on 31 December, a 22% premium on the group’s share price.
In a statement Entain said MGM’s offer “significantly undervalues the company and its prospects”.
It asked for further information outlining the strategic thinking behind the takeover.
Clear rationale
MGM and Entain already operate the BetMGM JV and MGM’s rationale is clear when it comes to U.S. sports-betting.
The sector has grown strongly in the past two years and is expected to hit $7bn in handle in 2020 and $9bn in 2021.
MGM wants to own all of the revenue generated by BetMGM along with Entain’s technology, trading and risk management expertise.
Itt seeks to become one of the top 3 betting brands in the U.S.
The alternative would be to spend the next few years developing market share and continuing to split revenues with Entain.
The competition is also not standing still. The likes of DraftKings, FanDuel and William Hill/Caesars are all forging ahead with similar ambitious plans
State budgets and land-based casinos have also been hit hard by COVID19 closures.
As a result an increasing number of states have fast-tracked betting bills in order to generate jobs and tax revenues.
U.S. split?
A sustained focus on online and mobile betting channels has been the result.
Operators are now rushing to develop their interactive gambling divisions.
MGM’s move has also increased speculation that Entain’s non-U.S. facing businesses will be sold.
This would mirror what happened to William Hill’s UK and other international assets when it was acquired by Caesars Entertainment.
Iowa mobile launch
To illustrate the speed of change in sports-betting, BetMGM launched its sports betting app in Iowa on Monday.
It makes Iowa the eighth state in which the group’s betting app is live.
The app will offer bettors parlay, pre-game and live-betting options and BetMGM’s integration with the MGM Resorts M-life Rewards program.
That will offer Iowa players the chance to redeem their game-play at MGM Resorts properties nationwide.
