MGM Considers Another Entain Bid

By Ben Hamill - July 20 2021

MGM Resorts International

It is no secret that MGM Resorts International attempted to purchase Entain in January, offering a stunning $11.06 billion. But this amount was rejected, with the target company saying that the offer simply wasn’t adequate. Following this failed takeover, UK law came into the picture with currently standing regulations saying that another bid could not be made for at least 6 months.

Those watching the calendar will know that, as of July 19th, that waiting period is now officially over. All eyes have subsequently turned to MGM, waiting to see if another bid will be put on the table. It isn’t clear if the behemoth will or won’t take another run at Entain, but speculations are certainly running rife.

On the other hand, business minds everywhere have been hard at work trying to figure out why the incredible $11.06 billion bid was rejected in the first place.

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Chasing The Growth

Earlier in the year there was talk that MGM would be getting support from an investor, which would help raise the financing for a follow up bid. There has not been any further mention of this deal, suggesting that the plan fell through. But regardless of whether the corporation does manage to get support, any follow-up bid is going to have to be significantly more than the previous sum offered.

The fact of the matter is that since January the value of Entain has increased considerably, so much so that the current estimated value may just be beyond MGM’s reach. In January the target company’s shares stood at $19.03 but are now significantly higher at $25.05.

With that being said, it has been reported that the enormous purchasing corporation has liquidity of around $9.7 billion, meaning that with the right support a possible deal could still come to fruition.

What If It Does Happen?

So much has been said about the billions being throw around for the deal that some may have not even stopped to consider what would happen if the deal did eventually go through. If MGM finalised the purchase, not only would they suddenly be stuck with numerous physical real estate assets but would also be plunged into the Australian and European betting markets.

MGM is famous for preferring a business model that does not include physical assets and has also never done any business in the Australian or European markets. So, what exactly would they do?