“The board has also asked [MGM] “provide additional information on the strategic rationale for a combination of the two companies,” Entain said. The British company has received multiple proposals from MGM, as its statement suggested. MGM representatives did not immediately respond to a request for comment.
Shares of Entain rose more than 26% on Monday, surpassing the price per share offered by MGM as a signal that some investors are expecting another offer from the US company or another bidder. MGM is a major player in Las Vegas, operating casinos such as Bellagio and Mandalay Bay.
Companies have an existing relationship. MGM and Entain are joint owners of BetMGM, a sports betting and online gaming company that operates in more than a dozen U.S. states. Entain, which owns brands such as Eurobet, Ladbrokes and Sportingbet, operates both retail and online businesses.
Nicholas Hyett, a Hargreaves Lansdown equity analyst, 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 to swallow for MGM shareholders.”
Shares of MGM fell 0.3% in premarket trading on Monday.
Sports betting boom
The online sports betting industry was already growing in the United States following a 2018 U.S. Supreme Court decision that paved the way for it to be legalized in states outside of Nevada. The American Gaming Association expects nearly 35 million people, or 13% of American adults, to bet on the 2020 NFL season.
The pandemic has only accelerated the trend, causing a wave of negotiation and consolidation.