MGM is looking to buy the owner of Ladbrokes

The exact details and value of the new offer could not be known, but it is above £ 12.85 (or $ 17.56 at current exchange rates), a share that MGM had offered at the end of the year. last year, according to people. There is no guarantee that Entain will be receptive to the new offer or that there will be an agreement.

A combination could create one of the few large gaming companies in the world with a significant online and brick presence. The recent consolidation of the sector would follow.

Like its peers, MGM has been under pressure as the coronavirus pandemic kept its biggest money winners (casinos and hotels in the Las Vegas strip) closed or with very low capacity for much of the year. .

Meanwhile, the online gaming market was already booming before the pandemic gave it an extra boost. This has caused casino operators like MGM to pivot their businesses even faster than expected, often through partnerships and acquisitions.

Currently, MGM gets a small portion of its revenue from online gambling, which casinos have long seen as a threat, but which they increasingly see as an opportunity because people are socially away from home and the pandemic keeps them players away from slot machines and blackjack tables. The trend towards online gaming is not expected to reverse any time soon.

Entain, until recently known as GVC Holdings, is one of the largest gaming companies in the UK after signing a nearly $ 5 billion deal that put Ladbrokes under its roof in 2018. Its shares range increased recently as the pandemic became the center of online gaming. Las Vegas-based MGM has a market value of about $ 16 billion and is best known for its casino properties that include the Bellagio and Mirage.

Barry Diller’s Internet conglomerate, IAC, became MGM’s largest shareholder in August, and revealed an approximately 12% stake valued at approximately $ 1 billion. He said at the time that he planned to work with the company to expand its online gambling business. IAC President Diller and Executive Chairman Joey Levin also joined MGM’s board of directors.

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

Caesars Entertainment Inc.

CZR 0.79%

recently reached a deal worth about $ 4 billion to buy William Hill WMH based in the UK 0.30%

PLC, which already has a joint venture with rival MGM. Caesars shareholders cheered the deal, with shares ending the year at around 25%. The transaction will close in March.

Meanwhile, investors have been piling on companies with the potential to be protagonists in the growing online gaming market, especially at DraftKings stock prices in the US. Inc.

DKNG -4.88%

and Penn National Gaming Inc.,

PENN -0.83%

for example, it shot up nearly 340% and 240% in 2020, respectively.

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

Shares of MGM closed the year 5% lower, while those of Entain closed around 30%, possibly making a gesture towards their potential as an acquisition target.

MGM and Entain management teams have existing links. Since 2018, they have become exclusive partners of BetMGM, a small but growing online gaming company both parties recently funded. BetMGM, which uses Entain technology and MGM licenses and trademarks, operates in more than ten states, including Nevada, New Jersey and Indiana. It plans to reach more than 20 by the end of this year.

Write to Cara Lombardo a [email protected]