MGM Resorts International has asserted a belief that its proposed offer for Entain is “compelling,” after the latter asserted that an £8bn offer “significantly undervalues” the company.
Following press speculation which claimed MGM had had a US$10bn (£7.3bn) cash offer rejected, the US casino operator was asked to provide additional information in respect of the strategic rationale for a combination of the two companies.
In response to the request, MGM says that it “believes both its proposal and the strategic rationale for the combination are compelling and looks forward to engaging with Entain on this basis.”
In particular, the firm says that a combination of the two would deliver full control of the BetMGM business to leverage the rapidly growing US igaming and sports betting opportunity; as well as position the company as a global gaming firm across both online and retail.
Furthermore, MGM says that a merger would also expand and diversify the company’s operations, product offerings and earnings; and position the combined company for future growth and investment by leveraging its leading brands, leading technology platform and strong balance sheet.
Adding that “there can be no certainty that any offer will be made for Entain,” the company confirmed a 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.
In a media statement, it was said: “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, the company’s largest shareholder, has indicated it would potentially fund a portion of the partial cash alternative through a further investment in MGM.”