The investment community welcomed the news that MGM Resorts International was no longer seeking to buy Entain Plc., its 50-50 joint venture partner with sports betting operator BetMGM.
Actually, analysts were relieved by the comments from CEO Bill Hornbuckle during the company’s fourth-quarter conference call last week.
“We actually thought the best thing that MGM noted on its call,” Stifel Financial gaming analyst Steven Wieczynski wrote in a research note. “We believe this is one of the more controversial topics around this story and one that has probably kept a lot of investors on the sidelines.”
Hornbuckle said in response to an analyst’s question that MGM Resorts had “moved on” from trying to acquire United Kingdom-based Entain.
MGM Resorts made an $11 billion offer for Entain in January 2021, but it was rejected by the company. It was anticipated that MGM Resorts would make another offer for Entain in the next two months once U.K. gaming authorities clarify the country’s gaming regulations.
“We value the relationship with Entain. We value BetMGM,” Hornbuckle said. “We remain highly focused on BetMGM through our partnership with Entain and making sure that business continues to grow.”
A few hours earlier, Entain CEO Jette Nygaard-Andersen was recommended for approval by the Nevada Gaming Control Board to serve as a member of BetMGM’s governing board.
“I’ve just passed my two years as CEO and being one of few female women leading a large global company, I am aware of my role as a member, as well as a role model,” Nygaard-Anderson told the control board.
Since its launch in 2018, BetMGM has become one of the top four sports betting companies in the U.S. with operations in 26 states. The company said it finished 2022 with $1.44 billion in revenue and predicted 2023 revenue would grow to $1.8 billion to $2 billion.
Hornbuckle said MGM Resorts would focus its European internet casino efforts through its purchase last year of Swedish online gaming company LeoVegas for $607 million.
Deutsche Bank gaming analyst Carlo Santarelli said MGM Resorts was “fairly forthright” in moving on from a purchase of Entain.
“While some will say that this serves as a negotiating ploy, we remind investors that the U.K. takeover laws are rather stringent, and as such, we find it rather difficult to believe another effort is realistic in the near to medium term,” Santarelli wrote in a research note.