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MGM Resorts (MGM) Seeks to Acquire Entain With New Offer

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Speculation is rife about MGM Resorts International (MGM - Free Report) seeking to buy U.K.-based gaming company Entain PLC (earlier known as GVC Holdings). Notably, this is the second time MGM Resorts is aspiring to acquire the British gambling brand Ladbrokes after an all-cash $10-billion overture was rejected earlier.

Per Wall Street Journal, the new offer is likely to have a substantial stock component with a price more than the previously-quoted 12.85 pounds-a-share. The value of the new offer is approximately $11 billion. Also, the new bid is likely to be backed by MGM Resort’s largest shareholder, IAC (InterActiveCorp).

However, the exact details of the transaction have been kept under wraps and acceptance of the new offer is still in the balance.

Sports Betting: Major Growth Driver

Since 2018, MGM Resorts and Entain have been partners to boost sports betting opportunities in the United States. In July 2020, MGM Resorts and Entain announced second round of investment in BetMGM. Together, the parties brought the total investment to $450 million. In the first round, the companies had invested $200 million. Ever since its launch in 2018, the company has done extremely well and is on track to operate in 11 states by the end of 2020. Meanwhile, due to increase in operations across the United States, the company anticipates sharp growth in 2021. It expects to generate revenues of nearly $8.5 billion by 2025.

Price Performance

Coming to price performance, shares of MGM Resorts have surged 88.5% in the past six months compared with the industry’s 43.3% surge. Notably, the company is benefitting from its increased focus on asset light strategy, non-gaming activities and digital initiatives. Also, it is confident about prospects in Macau and will continue to invest in the same.

MGM Resorts, which shares space with Caesars Entertainment Corporation (CZR - Free Report) , Red Rock Resorts, Inc. (RRR - Free Report) and Penn National Gaming, Inc. (PENN - Free Report) in the Zacks Gaming industry, has a Zacks Rank #4 (Sell) at present.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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