The chairman of the biggest stakeholder in MGM Resorts – IAC – has shared he doubted that the acquisition bid of the US casino giant for the UK gambling company Entain will be successful.
Despite a few days ago IAC pledged to provide MGM Resorts with financial support amounting to $1 billion for the deal, Barry Diller told the Financial Times that he was sceptical about the outcome of the proposed takeover deal. Still, Mr Diller shared that he remained “absolutely sure” that whatever happens with the acquisition bid, MGM Resorts would keep its leadership positions in the market.
As mentioned above, on January 8th, IAC promised to invest a further $1 billion in MGM – an amount that would help it fund a cash alternative for the shareholders of the British gambling business Entain. The latest all-stock acquisition offer made by the US casino giant to its UK takeover target has valued the latter at about £8 billion ($11 billion).
The proposed takeover offer has been rejected by Entain’s board after arguing that the bid considerably undervalues the company’s business. The British gambling operator’s board also put “the strategic rationale” of such a deal under question.
Entain Could Get Better Presence in the US Sports Betting Sector If Agrees to the Deal
At the time when Entain rejected the acquisition bid of MGM Resorts, representatives of some of the largest shareholders in Entain, such as Wes McCoy, Standard Life Aberdeen’s investment director, supported the board’s decision, saying the investors were willing to see an offer that would properly value the strong digital presence of the company in all its jurisdictions.
As the Financial Times reported, Barry Diller, whose company currently owns over 30 media and digital brands, including The Daily Beast and Ask.com, explained that the companies’ public market values have to be completely in line when it comes to all-stock transactions. However, he said that questioning the strategic rationale of such a merger is not so great.
If the two companies manage to reach an agreement on a potential merger, Entain would offer sports betting in the lucrative US market that has been an expansion target for many British gambling operators. Entain, which is the owner of the Ladbrokes and Coral brands, has been an acquisition target for MGM Resorts mostly because of its expertise in the sports betting and online gambling sector.
According to analysts, the US could grow to become the largest legal sports betting market on a global scale, with a market value of $13 billion. Sports betting services became officially legal in the country after the federal ban on the practice was overturned by the US Supreme Court in 2018.
As mentioned above, IAC’s boss believes whatever the deal of the Entain negotiations, there were still many opportunities for further growth for the US casino company.
- Author
Olivia Cole
