MGM Resorts International is again trying to build a global business for online sports betting and online casino gambling, as the hotel operator announced Monday it is offering to buy Swedish iGaming company LeoVegas AB for around $607 million.
Las Vegas-based MGM said it launched a recommended public tender offer for 100% of the shares of Stockholm-headquartered LeoVegas. The approximately $6.20-per-share bid will be paid for with cash on hand, with the acceptance period expected to start in or around next month and end somewhere in or around August.
MGM anticipates the deal closing during the second half of the 2022 fiscal year, although that will depend on the receipt of certain shareholder and regulatory approvals. That includes MGM securing the ownership of more than 90% of LeoVegas shares.
"Our vision is to be the world's premier gaming entertainment company, and this strategic opportunity with LeoVegas will allow us to continue to grow our reach throughout the world," MGM Resorts CEO and President Bill Hornbuckle said in a press release.
A backdrop worthy of legendary moments. pic.twitter.com/Xa0C8pwwep— MGM Resorts (@MGMResortsIntl) April 29, 2022
MGM operates more than 30 hotels and casinos around the world, and it is already a 50/50 owner of BetMGM, which offers online sports betting and casino gaming in the United States. The play for LeoVegas could help create something similar abroad, where MGM lacks the same kind of iGaming presence.
It is not MGM’s first attempt at global iGaming growth either, as the company proposed buying British gaming firm Entain PLC for around $11 billion last year. MGM wound up backing off after Entain, the other owner of BetMGM, claimed the offer undervalued its shares and prospects.
"We have achieved remarkable success with BetMGM in the U.S., and with the acquisition of LeoVegas in Europe we will expand our online gaming presence globally," Hornbuckle added in the release.
Plenty of interest
LeoVegas was founded in 2011 and holds gaming licenses in eight jurisdictions — mostly Nordic and European — the release stated (it also offers online casino gaming and sports betting in Ontario). The company generated more than $400 million in revenue and $50 million in adjusted earnings before interest, taxes, depreciation, and amortization for the year ended March 31.
The LeoVegas board of directors has unanimously recommended the company’s shareholders accept the MGM offer. The directors said it represents a premium of approximately 44.1% compared to the closing price of around $4.28 on April 29, the last trading day before the offer was announced.
Shareholders representing around 15.3% of the company’s stock have already pledged to accept the offer, including CEO Gustaf Hagman.
What’s more, the announcement by LeoVegas said it has had other suitors come knocking. The board’s press release noted it has “received several indications of interest or non-binding offers concerning a potential tender offer.”
However, MGM bumped up the value of its offer during negotiations “to a price level other interested parties could not match,” which helped secure the support of the LeoVegas board of directors.
“LeoVegas operates in an industry which is characterised by, inter alia, high innovation pace, new regulation and consolidation,” a press release from the LeoVegas board said. “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.”