Operator News
US – MGM backs ‘compelling’ Entain merger proposal
By Lewis - 5 January 2021
MGM has publicly supported its proposal and strategic rationale for a merger with Entain as ‘compelling’ and has said it ‘looks forward to engaging with Entain on this basis’, whilst adding that there can be no certainty that any offer will be made.
In a statement responding to Entain’s announcement, MGM has said that a combination with Entain would deliver full control of the BetMGM business to leverage the rapidly growing US iGaming and sports betting opportunity and position the company as a global gaming company across both online and retail with a leading end-to-end technology stack.
MGM added that a merger would also see them expand and diversify operations, product offerings and earnings, positioning the combined company for future growth and investment by leveraging its brands, technology platform and strong balance sheet.
MGM proposed an offer of 0.6 MGM shares for each Entain share, which, based on closing prices on December 31, 2020, represents a value of 1,383 pence per Entain share and a premium of 22 per cent to Entain’s share price.
Under the terms of the proposal, Entain shareholders would own approximately 41.5 per cent of the combined company. The company has also indicated that a partial cash alternative could also be made available to Entain shareholders. In addition, IAC, its largest shareholder, has indicated it would potentially fund a portion of the partial cash alternative through a further investment in MGM.
Entain’s board has stated that it believes the proposal undervalues Entain but has also asked the MGM to provide additional information in respect of the strategic rationale for a combination of the two companies.
