Entain Makes $343m Bid for Enlabs AB, Just Days After Declining MGM Offer

  • So far, 42.2% of Enlabs’ shareholders have accepted Entain’s offer of SEK40 ($4.88) per share
  • Shay Segev, Entain’s CEO, said the acquisition aligns with the group’s plans for expansion
  • Earlier this week, Entain rejected an $11bn MGM offer, saying it undervalued the company
  • Entain saw revenue increase by 12% year-on-year in Q3 2020, despite a decline in UK retail
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Entain has announced a bid of $343m for Swedish sports betting company Enlabs after rejecting a takeover offer from MGM earlier this week. [Image: Shutterstock.com]

Update: According to major shareholder Alta Fox Capital Management LLC, Enlabs AB will reject Entain’s acquisition offer. The shareholding company informed on January 18 that it will not tender its shares at the current bid price, which it said “materially undervalues the company.” Alta Fox added that it has non-binding signatures from other investors who are also against the deal. Altogether, those in opposition hold 10.7% of Entain’s shares.

A bid for European expansion

Gambling operator Entain, formerly known as GVC Holdings, has offered to acquire Swedish sports betting company Enlabs AB for a total of $343m. The move comes just days after Entain declined MGM Resorts’ $11bn offer to take over the UK-based company.

In a statement published on Thursday, Entain announced the cash offer of SEK40 ($4.88) per Enlabs share. Shareholders holding 42.2% of total Enlabs shares have accepted the offer, according to Entain. The acceptance period will run from January 21 to February 18.

perfectly aligned with our strategy of expanding across new regulated international markets”

Outlining reasons for the offer, Entain pointed to Enlab’s strong performance in European markets such as Latvia, Estonia and Lithuania. Shay Segev, CEO of Entain, said: “The acquisition of Enlabs is perfectly aligned with our strategy of expanding across new regulated international markets.”

One offer made, another snubbed

Earlier this week, Entain responded to an offer made by MGM Resorts International. The global casino company bid $11bn for Entain after increasing a previously rejected $10bn offer. The bid represented a value of $18.92 per Entain share on the last trading day prior to the offer. If successful, it would have seen MGM acquire more than 30 brands, including Ladbrokes, bwin and partypoker.

The amount, however, did not satisfy Entain. In a statement, the operator described MGM’s offer as one that “significantly undervalues the Company.” Entain declined the bid, but requested more information in regards to MGM’s planned takeover of the company. MGM now has until 5pm on February 1 to signal its intention to make another offer.

MGM has since posted a response to Entain’s request. Among its reasons for making the bid, MGM said it could utilize full autonomy over the BetMGM brand for increased growth in the US online sports betting market. The operator also outlined intentions to increase its international reach in both the online and retail spheres. That said, MGM added that there is no certainty it will make a new offer for Entain.

MGM and Entain have shared ownership of BetMGM since launching the US sports betting brand in July 2018. Primarily launched as an online sports betting company, the BetMGM business now includes sites for online casino and poker. In July 2020, both Entain and MGM demonstrated their commitment to the brand with a second round of investment. At the time, this increased BetMGM’s total funding to $450m.

Entain’s steady growth

Despite the impact of coronavirus on Entain’s retail sector in 2020, the operator still saw growth in its online business. The company partly attributed this to the steady expansion of BetMGM into new states during the year, including Indiana, Colorado, and West Virginia.

Entain’s net gaming revenue (NGR) increased by 12% year-on-year for Q3 2020

In the company’s most recent trading update, Entain’s net gaming revenue (NGR) increased by 12% year-on-year for Q3 2020. This was mainly thanks to the performance of online sports betting and gaming, which increased 24% and 27%, respectively. In contrast, UK retail NGR fell by 5%, while European retail grew marginally by 2%. For the full year 2020, Entain expects its EBITDA to be in the range of £770m ($1.04bn) to £790m ($1.08bn).

Entain also set out its strategy for sustainability, growth and innovation last year. As part of this plan, the company said it aimed for 100% of its revenue to come from nationally regulated markets by 2023. Additionally, Group CEO Shay Segev said the company planned to “grow into new markets” and “reach new audiences” through its rebranded corporate identity.

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