The share price of Entain has reached an all-time high after it was rumoured that MGM are planning to revive their takeover bid.
Entain, who own Party Casino, Gala Casino, Foxy Bingo and a host of other big name brands, has already rejected an £8 billion offer from the American casino firm this year, claiming that it grossly undervalued the true worth of the company.
However, recent activity in the United States has seen MGM receive £3 billion from the sale of their stake in sister company MGM Growth Properties – and some have put two and two together to insinuate they may be planning a fresh takeover bid.
According to market analyst Michael Mitchell, MGM could now be set for that renewed attempt. He told Yahoo Finance:
“Investors have been debating the likelihood of MGM returning with an improved bid for ENT since its first unsuccessful bid.
“The market believes (MGM’s) strengthened balance sheet, following today’s news, has increased the possibility of the same.”
Rather ominously, MGM published their own media release claiming that the sale would ‘enable execution of our goals of becoming the premier gaming entertainment company.’
After being brushed off by Entain back in January, many thought that the matter was closed and that MGM might seek other investment targets in the UK sector. Domestic takeover law dictates that fresh negotiations can’t begin until six months later once a party has walked away, but that timespan has now cleared.
The two firms continue to work together on the BetMGM project in the US, and the feeling is that while there is a connection between them MGM will be tempted to pursue a new offer.
For now, Entain shareholders won’t mind. They saw 8% added to the value of their investment today on the basis of the rumours – the top gaining stock on the FTSE 100 index. Interestingly, Flutter and 888 also saw their share price increase by 3% and 5% respectively….could they also be the subject of a hostile bid from MGM?
From Across the Pond
The potential hook up between MGM and Entain would not be the only time that British and American firms have joined forces in recent times.
William Hill was acquired by Caesars Entertainment in April after the £2.9 billion deal was given the green light by competition regulators. The US firm will utilise Hills’ expertise in their domestic project, however they have confirmed they want nothing to do with the firm’s betting shops nor their UK-facing website – the likes of 888, Betfred and Apollo Global Management are said to be in the running.
Meanwhile in March, the casino game developer Gamesys was the subject of a takeover bid from American outfit Bally’s.
Shareholders signed off on the deal in June, and will see Bally’s take full control of Gamesys’ products and services. A cool £2 billion will exchange hands, although the takeover has yet to be given the approval of regulators.
But it’s not just North American firms muscling their way into the UK market. Flutter, who operate the likes of Betfair and Paddy Power, completed their takeover of the Stars Group in May 2020 for £3.8 billion.