MGM is a giant in the land-based gaming world. They have developed a pretty significant online market share alongside Entain with offerings like BetMGM Sportsbook in Tennessee and many other BetMGM sites. Looking to expand further, they have just agreed to a deal with LeoVegas, a well-known and sizeable online gambling operator. They acquired the company for $607 million, and the LeoVegas board unanimously accepted the offer.
The Acquisition of LeoVegas
It is believed that MGM can finance the deal through its cash reserves, which means that each share will cost them $6.16, which is more than the closing share price achieved by the company on April 29th, 2022. The primary reason for acquiring LeoVegas is to ensure that they can expand into Europe, giving them domination of two of the biggest markets, in both the UK and the USA.
The Vision for MGM
Speaking about the deal, the CEO and President of MGM Resorts, Bill Hornbuckle, said, “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 across the globe. We have achieved remarkable success with BetMGM in the US, and with the acquisition of LeoVegas in Europe, we will expand our online gaming presence globally. We believe that this offer creates a compelling opportunity that allows the combined teams of MGM Resorts and LeoVegas to accelerate our global digital gaming growth and fully realise the potential of our omnichannel strategy.
We look forward to being able to welcome the LeoVegas team to our MGM Resorts family.”
LeoVegas Embrace the Deal
Speaking on behalf of the board of directors, a spokesperson said, “LeoVegas operates in an industry which is characterised by, inter alia, high innovation pace, new regulation and consolidation. In this context, the board of directors believes that the industrial logic and strategic fit between LeoVegas and MGM is attractive and should serve both the company and its employees well in the future.” They expect the deal to be completed towards the end of 2022 and is supported by the largest shareholders, who include Gustaf Hagman and Torsten Söderberg. Although it is yet to be formally ratified, it requires a 90% vote, and as there was a unanimous agreement, this should not be an issue. It seems inevitable that the deal will go ahead and will dramatically increase the size and power of an already vast MGM brand.
MGM and Entain
Although MGM put in a bid to acquire Entain, the two remain separate entities that operate cooperatively with the BetMGM venture in North America. It is thought that this will continue, but MGM owning LeoVegas puts them head-to-head in every other country. This could cause friction in a relationship that has seen them become the premier site for all major US states where gambling has been legalised. When MGM released details of the LeoVegas acquisition, it did not make any mention of Entain. Some people have suggested this will be an issue in the future, and Regulus Partners expressed their concerns. They feel that the joint ownership of BetMGM offers a more capable sports betting and poker offering than Leo Vegas while encouraging punters to bet online responsibly. However, after a failed acquisition, it is unclear at this point as to whether MGM will look to usurp the partnership with the new LeoVegas acquisition or whether the two companies will continue to work collaboratively in the USA while going head-to-head in Europe, Canada and the rest of the world.
