“The council also asked [MGM] to provide additional information regarding the strategic logic for a combination of the two companies, “said Entain. The UK company received several proposals from MGM, his statement suggested. MGM representatives did not immediately respond to a request for comment.
Entain’s shares rose more than 26% on Monday, exceeding the price per share offered by MGM in a sign that some investors are expecting another offer from the American company or another bidder. MGM is a major player in Las Vegas, operating casinos, including Bellagio and Mandalay Bay.
Companies have an existing relationship. MGM and Entain are co-owners of BetMGM, a sports betting and online gaming company that operates in more than a dozen U.S. states. Entain, which owns brands including Eurobet, Ladbrokes and Sportingbet, operates retail and online businesses.
Nicholas Hyett, a stock analyst at Hargreaves Lansdown, said he “can understand why MGM wants to take control” of Entain, as the two companies are already working together on sports betting in the United States. But he warned that a higher price “may be too much for MGM shareholders to swallow”.
MGM’s shares fell 0.3% in pre-market trading on Monday.
Sports betting boom
The online sports betting industry was already booming in the United States after a U.S. Supreme Court ruling in 2018 that paved the way for it to be legalized in states outside Nevada. The American Gaming Association expects nearly 35 million people, or 13% of American adults, to bet on the 2020 NFL season.
The pandemic only accelerated the trend, generating a wave of negotiations and consolidation.