MGM plans to buy Entain, owner of Ladbrokes

The exact details and the value of the new offer could not be discovered, but it is over £ 12.85 – or $ 17.56 at current exchange rates – an action that MGM had offered last year, people said . There is no guarantee that Entain will be receptive to the new offer or that there will be a deal.

A combination could create one of the few major gaming companies in the world with a significant and physical online presence. It would follow another recent consolidation in the industry.

Like its peers, MGM has been under pressure while the coronavirus pandemic has kept its biggest moneymakers – casinos and hotels on the Las Vegas Strip – closed or operating at drastically reduced capacity for much of the year.

The online gaming market, however, was already growing before the pandemic gave it an additional boost. This has made casino operators like MGM move their business even faster than planned, usually through partnerships and acquisitions.

MGM currently gets a small share of its online gambling revenue, which casinos have long seen as a threat, but increasingly see it as an opportunity as people socially distance themselves at home and the pandemic keeps players away slot machines and blackjack tables. The trend towards online gambling is not expected to be reversed anytime soon.

Entain, known as GVC Holdings until recently, is one of the UK’s largest gaming companies after closing a deal of around $ 5 billion that put Ladbrokes under its roof in 2018. Its stock rose recently when the pandemic brought the online game to the center of the stage. Las Vegas-based MGM has a market value of about $ 16 billion and is best known for its casino properties, which include the Bellagio and Mirage.

Barry Diller’s Internet conglomerate, IAC, became MGM’s largest shareholder in August, reporting a stake of approximately 12%, valued at around $ 1 billion. At the time, she said she planned to work with the company to expand its online gambling business. Mr. Diller, chairman of IAC, and chief executive Joey Levin also joined the MGM board.

Another of its major shareholders, Corvex Management LP, also has a seat on the board held by the founder of hedge fund activist, Keith Meister.

Caesars Entertainment Inc.

CZR 0.79%

recently closed a deal of around $ 4 billion to buy William Hill WMH from the UK 0.30%

PLC, which already has a joint venture with rival MGM. Caesars shareholders applauded the deal, with the shares closing the year up about 25%. The transaction is scheduled to close in March.

Investors, however, have been accumulating in companies with the potential to be big players in the growing online gaming market, especially in the US stock prices of DraftKings. Inc.

DKNG -4.88%

and Penn National Gaming Inc.,

PENN -0.83%

for example, it rose almost 340% and 240% in 2020, respectively.

DraftKings went public in April through a transaction with a blank check company and a merger with a small provider of gambling technology simultaneously. Penn National in early 2020 took a significant stake in Barstool Sports Inc., in an agreement that gave it exclusive rights to use the media company’s brand in its sports betting products.

MGM’s shares ended the year with a fall of around 5%, while Entain’s shares rose about 30%, possibly in a nod to its potential as an acquisition target.

MGM and Entain management teams have existing ties. Since 2018, they have become exclusive partners with BetMGM, a small, but growing, online gaming company that both parties have recently funded. BetMGM, which uses Entain technology and MGM licenses and brands, is operating in more than 10 states, including Nevada, New Jersey and Indiana. It has plans to be in more than 20 by the end of this year.

Write to Cara Lombardo at [email protected]