Earlier this week, news surfaced on a takeover proposal from DraftKings to acquire Entain Plc for an estimated $22 billion. First a rumor, but later confirmed by both companies, the offer is currently being considered by the U.K. company. Now all attention is set on MGM Resorts International, Entain’s partner in the U.S. via their joint venture BetMGM.
According to Bloomberg, MGM is weighing ways to get control of the BetMGM brand now that its partner has received the takeover bid, said people with knowledge of the matter. Any transaction whereby Entain or its affiliates would own a competing business in the US would require MGM’s consent, stated the company on Tuesday.
BetMGM is projected to make more than $1 billion in revenue next year. MGM Resorts, as a 50/50 partner in the business, has the power to block any deal with competing businesses like DraftKings. Management of the Las Vegas-based operator believes that gives them leverage to gain control of BetMGM without spending a great deal of cash, reports the previously cited news source.
Moreover, people familiar with the matter said MGM is unlikely to bid for all of Entain or try to buy out the other half of the venture. This news casts doubt over speculation that MGM was planning to counter DraftKings’ proposal with one of its own. Earlier this year, MGM offered Entain $11 billion to take over its assets, a proposal dismissed by the U.K. company as it considered the bid to undervalue its business.
What MGM is allegedly considering instead of a takeover proposal is alternative ways to gain control, such as obtaining a majority of the board seats or seeking to take BetMGM public, the people said to Bloomberg. Such an arrangement could involve licensing technology from a combined DraftKings and Entain.
On Tuesday, tackling media speculation on the subject, MGM released a press statement which said: “MGM’s priority is to ensure that BetMGM continues to capture the growing U.S. online opportunity and realizing MGM’s vision of becoming a premier global gaming entertainment company.”
The press release confirmed the company’s intentions to not let go hold of BetMGM. “MGM believes that having control of the BetMGM joint venture is an important step towards achieving its strategic objectives,” said the statement. A significant player within the U.S. market, BetMGM was in June the third-largest operator in sports betting in the country, and No. 1 in online casino games, according to research firm Eilers & Krejcik.
Entain is the parent company of British bookmaker Ladbrokes, and other businesses including Coral and bwin. On Wednesday, Entain confirmed a proposal received on Sept. 19 and said it would “carefully consider” the bid. A further statement will be made “as and when appropriate.”