MGM Resorts International said Friday its largest shareholder was committed to investing up to $1 billion into the casino company’s effort to acquire Entain PLC, one of Europe’s largest online gaming conglomerates.
In a statement Friday, MGM Resorts said IAC/InterActiveCorp, which is controlled by billionaire media mogul Barry Diller, indicated in a letter of intent it would be willing to consider funding part of the deal.
Earlier this week, MGM Resorts made an $11 billion offer for Entain, the casino company’s 50-50 joint-venture partner in Roar Digital, which oversees sports betting operator BetMGM. Entain’s board rejected the MGM offer as undervalued but asked for additional information on the merger’s strategic rationale.
MGM Resorts said IAC would fund “a portion of the partial cash alternative” due to its “confidence in MGM and its prospects.”
IAC spent more than $1 billion last summer to acquire a 12% stake in MGM Resorts. Diller, who is IAC’s chairman, and company CEO Joey Levin are now members of MGM’s board.
“IAC has to date invested approximately $1 billion in MGM with an initial investment thesis of accelerating MGM’s penetration of the $450 billion global gaming market,” MGM Resorts said in a statement. “IAC notes in its letter of intent that IAC continues to strongly support this objective for MGM whether or not a transaction with Entain is consummated.”
In its letter, IAC called the proposed MGM Resorts-Entain combination “compelling,” citing five different bullet points highlighting the benefits from the merger.
BetMGM had steadily grown since Roar Digital was created through a pair of $100 million investments from MGM and Entain – formerly known as GVC Holdings – in 2018. BetMGM operates retail and/or mobile sports betting in 11 states.
In an interview with CDC Gaming last month, Entain CEO Shay Segev said BetMGM could be in 20 states by the end of 2021.
Diller, in a letter to IAC shareholders last summer, said the MGM “presented a ‘once in a decade’ opportunity for IAC to own a meaningful piece of a preeminent brand in a large category with great potential to move online. IAC has always been opportunistic with its capital, and if ever there was a time, this moment is unique.”
Entain operates several European online gaming brands, including bwin, PartyPoker, Ladbrokes, Coral, and FoxyBingo.
The move by MGM Resorts comes three months after Caesars Entertainment announced plans to acquire United Kingdom-based sports betting giant William Hill for $3.7 billion. Caesars, which operates more than 50 gaming properties in 16 states, owns 20% of William Hill US, the British company’s American subsidiary, through a previous deal.
Analysts expect Caesars to sell William Hill’s European operations and keep the U.S. business, which currently covers 170 retail locations across 13 states with a 29% market share of all U.S sports betting. Caesars expects its transaction will close in March.
Diller, 78, founded Fox Broadcasting Co. and USA Broadcasting. He is currently No. 278 on the Forbes 400 with a net worth of $5.1 billion. He founded IAC in 1995 and is chairman of online travel giant Expedia, which acquired its holding company, Liberty Expedia, in a $2.6 billion deal in 2019.
Shares of MGM closed at $31.36 Friday on the New York Stock Exchange, up 76 cents or 2.48%. IAC shares, traded on the Nasdaq, were unchanged at $191.48.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
