Isle of Man-based gambling company Entain, which was formerly known as GVC Holdings, saw a record increase in its share price on August 4th after it rejected an acquisition offer from MGM Resorts earlier in 2021 and a $4.4-billion asset sale by the US casino operator resulted in hopes for a renewed takeover offer for the British company. The shares of Entain increased by 8%, marking an all-time peak for the company that was also ranked as the top gainer on the FTSE 100 index.
As reported by Casino Guardian, Entain, which currently owns the popular Ladbrokes and Coral brands, turned down an $11-billion offer from MGM Resorts in January 2021 saying that the proposal undermines its financial value. Despite that, some investors and analysts believe that the recent sale of MGM’s stake in MGM Growth Properties will provide the US casino giant with some extra cash that could encourage the operator to make another acquisition offer for Entain.
Davy analyst Michael Mitchell said in an email that Entain investors had already been debating the chances of MGM Resorts returning with an improved takeover bid since its first unsuccessful attempt. As Mitchell explained, a stronger balance sheet could make MGM Resorts try once again to buy Entain.
In an announcement issued on August 4th, MGM revealed that the sale of its stake in MGM Growth Properties would give it $11.6 billion of domestic operations liquidity that would help it pursue its objectives of becoming the leading gaming entertainment operator.
MGM Resorts Said No Revised Takeover Bid Will Be Made When Entain Rejected the First Offer
In the last few years, American gambling companies have been demonstrating increased interest in their British rivals as they have been trying to take advantage of their experience and knowledge in sports betting, which got officially legalised in the US only recently. Furthermore, the popularity of the new form of gambling has been on the rise over the past year in the US during the coronavirus pandemic.
Although it may ensure some fresh money through the sale of its stake in MGM Growth properties, there is no guarantee that the American casino company would approach Entain with another acquisition offer. At the time when its original takeover bid got rejected by the British gambling operator, MGM Resorts shared that did not intend to submit a revised offer for the assets. Under the takeover rules in the UK, after walking away once, the US firm was stripped of the opportunity to make another bd for Entain for 6 months. However, this 6-month period expired on July 19th.
For the time being, both Entain and MGM Resorts have refused to make comments on a possible takeover deal.
The two companies already work in partnership in their US joint venture called BetMGM.
- Author
Olivia Cole
