MGM Resorts International has determined to withdraw its proposal to acquire Entain, its collaborator in the BetMGM joint venture.
The American gambling behemoth stated that they will not be presenting a formal proposition after meticulously evaluating their alternatives. They were obligated to submit a fresh proposal by February 1st, but they have chosen not to.
Earlier in the month, they proposed to exchange each Entain share for 0.6 MGM Resorts shares, placing a value on Entain at approximately $11 billion. This would have granted Entain shareholders a 41.5% interest in the consolidated entity.
However, the proposition was dismissed by Entain’s board, who asserted that it underestimated the company’s worth.
MGM Resorts’ primary shareholder, InterActive Corp (IAC), subsequently offered to finance a cash proposition for investors who were unwilling to exchange their shares.
Both entities have declared that the unsuccessful acquisition will not impact their ongoing partnership.
The BetMGM joint venture was established in 2018, with both companies possessing a 50% interest.
MGM Resorts initially poured $200 million into the venture, and by July 2020, the total backing had risen to $450 million.
MGM Resorts stated in its public proposal to Entain that the combination would enable the expanded enterprise to speed up BetMGM’s growth within the United States. It would also broaden the business across various channels and markets.
Bill Hornbuckle, the chief executive of MGM Resorts International, remarked: “BetMGM is our joint venture with Entain in the US sports betting and online gaming sector, and it remains a top priority for the company as we continue to digitally expand our exceptional physical gaming, entertainment, and hospitality platform.”
“We believe BetMGM has established a leading position in the US market, and we are dedicated to collaborating with Entain to ensure its strong progress continues, with plans to operate in 20 states by the end of 2021.”
Meanwhile, Entain declared that it has a clear growth and sustainability approach based on market-leading technology, which it believes will deliver “substantial value” to stakeholders.
“We look forward to continuing to work closely with [MGM Resorts] to achieve further success in the US through the BetMGM joint venture.”
Under City Takeover and Merger Guideline 2.8, MGM Resorts indicated that it retains the right to revoke its decision to not continue its interests under specific circumstances.
A fresh proposition or formal suggestion will only be presented if the Entain board endorses it or if another takeover entity submits a bid.
The firm might also re-submit a proposal if a reverse takeover transpires or any other notable alterations take place.
On Tuesday (January 19), MGM Resorts International’s share price declined 1.59% in New York to $29.80 per share, while Entain’s share price dropped 16.59% in London to 1,179.0 pence per share.
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