Four years ago, MGM Resorts International (NYSE: MGM) made an offer to acquire Entain Plc (OTC: GMVHY), its partner in BetMGM. Now, at least one analyst believes MGM might revisit such a proposal in 2025.
Macquarie analyst Chad Beynon suggested in a recent gaming equities report that MGM could make another play for Entain. The two companies currently share a 50/50 partnership in BetMGM, and MGM has long expressed interest in gaining full control of the online gaming entity.
Entain’s declining market capitalization could allow MGM to make a substantially lower bid than its 2021 offer of $11.06 billion while still enticing the Ladbrokes owner to negotiate. At the time, Entain dismissed the offer as inadequate.
MGM’s Focus on BetMGM
MGM’s previous takeover bid targeted all of Entain, but many analysts and investors believe the casino operator’s primary goal is to acquire the 50% of BetMGM it doesn’t already own.
A partial acquisition would likely be more cost-effective than a full takeover of Entain. Notably, in October 2023, former Entain CEO Jette Nygaard-Andersen acknowledged that joint ventures have limited lifespans, hinting at the company’s potential openness to divesting its BetMGM stake if the terms are favorable.
Macquarie’s Beynon highlighted this scenario as one of six potential catalysts for MGM stock in 2025, stating, “BetMGM has established itself as the number-three US online gaming operator, leading the ‘Tier 2’ companies. BetMGM achieved profitability in Q3 and recently launched a unified app and wallet in Nevada. We expect it to deliver its first full year of profitability in 2025.”
Entain Could Be a Willing Seller
Entain may be more receptive to a deal than it was four years ago due to recent management changes and pressure from activist investors. Nygaard-Andersen stepped down as CEO in December 2023, and activists have previously advocated for strategic asset sales to generate cash. Selling its 50% interest in BetMGM could align with these objectives.
Notable investors like Eminence Capital founder Ricky Sandler and Corvex Management’s Keith Meister could also influence discussions. Sandler has a seat on Entain’s board, while Meister, who is a director at MGM, has an equity position in the casino operator.
These factors suggest that conditions might be favorable for MGM to pursue Entain’s BetMGM stake in 2025. However, neither MGM, Entain, nor their investors have publicly indicated any ongoing negotiations.
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