Entain Upheaval Could Prompt Fresh MGM Bid

• MGM could consider new bid for Entain following CEO exit
• US casino operator tried to acquire BetMGM partner four years ago

Following the recent departures of three high-level executives, including now former CEO Gavin Isaacs, Entain Plc (OTC: GMVHY) could draw a new takeover bid from MGM Resorts International (NYSE: MGM), its partner on the BetMGM online wagering business.

Joining Isaacs in leaving the UK-based gaming company were Australia’s Deputy CEO and CFO Lachlan Fitt, and Cameron Rodger. A recent report by Bloomberg Intelligence suggested that turnover could compel MGM to consider another run at Entain.

At the time of the casino giant’s initial bid for Entain, Shay Segev was chief executive officer of the target, but he surprisingly exited soon after the offer was made. He was replaced by Jette Nygaard-Andersen who resigned in December 2023, meaning that with the departure of Isaacs, Entain is in the market for its fourth chief executive officer in four years.

Entain/MGM Rumor Getting Old

In the roughly 50 months since MGM’s original offer for Entain, rumors about another bid have been among the most mentioned in the gaming industry, but nothing has come of that.

MGM management has made clear it would love to control all of BetMGM, but executives have also publicly stated another offer for Entain isn’t in the cards. That doesn’t mean a proposal to purchase the 50% of BetMGM it doesn’t own won’t materialize.

Entain’s CEO departure has created a leadership vacuum that could prompt MGM to consider acquiring Entain’s 50% stake in BetMGM, valued at $4.2 billion-$5.6 billion in our updated valuation framework,” according to Bloomberg Intelligence.

Buying that stake is more economical than acquiring the entirety of Entain and if that transaction were to occur, it would allay concerns regarding overlap with MGM’s LeoVegas unit. If MGM were to make an offer for the half of BetMGM it doesn’t already control, it could do so with debt and cash on hand.

Bid for BetMGM Could Placate Investors

Should MGM make an offer for the other 50% of BetMGM and execute the transaction, it could be to the liking of the buyer’s investors as well as Entain’s.

As for Entain investors, they might welcome the influx of cash that comes from parting with the BetMGM stake rather than selling the entirety of the company at what would likely be a deep discount to the prices they paid for the stock.