MGM Resorts International has offered to acquire a global gaming operator on Monday. CEO Bill Hornbuckle hinted last quarter at the possibility of a global acquisition.
What is MGM’s Offer to Buy a Global Gaming Operator
The company stated on Monday that it is offering to buy out Swedish mobile gaming company LeoVegas for $607 million. The move was unexpected because experts thought MGM would try to buy BetMGM’s partner Entain again.
The analysts are expecting that the deal will be accretive to MGM Resorts’ earnings and cash flow per share. It will be funded with existing cash. This acquisition would allow MGM to expand its online gaming footprint to Europe.
LeoVegas is listed in Stockholm and is best known for its online casino products. It also has offices in the United Kingdom and Milan. The sportsbook is also powered by Kambi. It has licenses in eight jurisdictions in the Nordics and the rest of Europe.
What Does This Mean For MGM Moving Forward
This proposition is another big play for MGM. MGM is one of the leading online gaming companies in North America.
MGM has another chance to make the biggest potential deal in the industry’s history as the deal between DraftKings and Entain fell through. DraftKings was offering to buy Entain for $22.4 billion.
This potential agreement with LeoVegas will give MGM the opportunity to accelerate its growth moving forward. CEO Bill Hornbuckle stated in a press release;
“Our vision is to be the world’s premiere gaming entertainment company, and this strategic opportunity with LeoVegas will allow us to continue to grow our reach throughout the world.”
The acceptance period is expected to last through the summer as it will begin in June and expire at some point in August. The settlement is expected to begin around early September, assuming the offer is declared unconditional by the end of August.
To close the offer, it will be necessary to receive valid tenders covering at least 90 percent of LeoVegas’ shares and to meet customary closing conditions, which could take plenty of time. On the side of the negotiations, the company’s board has recommended the offer to its shareholders. The shareholders holding 15.1 percent of the company stated that they would accept the offer.
LeoVegas had a compounded annual growth rate of 16 percent from 2017 to 2021 while maintaining strong profitability. The company has also become one of Canada’s top sports betting operators.
How Did the Market React to the News
MGM Resorts International traded higher in the after-market hours after reporting a 73 percent jump in revenue. The revenue from Las Vegas Strip properties was up 205 percent to $1.7B vs. $1.5B consensus. Although MGM China was a disappointment due to the pandemic restrictions, MGM had a strong balance sheet that allowed the company to buy $1 billion back in stock.
Las Vegas hotel occupancy was also at 78 percent during the quarter in comparison to just 46 percent a year ago. As the company reports Q1 results after Monday’s close, shares were up over one percent as the price is currently at $42.70.