“The board has also asked [MGM] to provide additional information in respect of the strategic rationale for a combination of the two companies,” Entain said. The UK company has received multiple proposals from MGM, its statement suggested. Representatives for MGM did not immediately respond to a request for comment.
Shares in Entain increased more than 26% on Monday, surging above the price per share offered by MGM in a sign that some investors expect another offer from the US company or another bidder. MGM is a major player in Las Vegas, operating casinos including the Bellagio and Mandalay Bay.
The 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 US states. Entain, which owns brands including Eurobet, Ladbrokes and Sportingbet, operates both retail and online businesses.
Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said that he “can understand why MGM wants to take control” of Entain, given that the two companies are already working together on sports betting in the United States. But he cautioned that a higher price “may prove too much for MGM shareholders to swallow.”
MGM shares dipped 0.3% in premarket trade on Monday.
Sports betting boom
The online sports betting industry was already growing in the United States following a 2018 US Supreme Court decision that cleared the way for it to be legalized in states outside 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, sparking a flurry of dealmaking and consolidation.