American hospitality giant MGM Resorts International has announced a public tender offer to acquire Swedish mobile company LeoVegas AB for $607 million. The merger will be funded with MGM’s current cash balance. The acceptance period for the offer is expected to begin in June 2022, with the deadline being around August 2022, as per MGM.
LeoVegas offers an array of products, from casino games – be they slots of the deposit or no deposit variety, table games such as poker or blackjack, live casino and even sports betting. The common denominator of all its brands is the fact that they’re targeted at customers who view their offerings as a mode of entertainment.
As a forward thinking company itself, MGM felt that acquiring LeoVegas was a smart move, since the latter’s ‘mobile first’ strategy was always clear from the get-go. LeoVegas Mobile Gaming Group has numerous scalable and global brands, each of which having their own tone, whilst still imparting that undeniable fun factor.
Offer Period Might Expire in August 2022
The LeoVegas acquisition will increase MGM’s income and its cash flow per share. The group released a statement saying that an offer document might be publically available before the beginning of the acceptance period. As the offer period is expected to expire around August, the settlement might commence in the early days of September.
The note added that the offer would be subject to customary closing conditions and various regulatory approvals. Receiving valid tenders of more than 90% of LeoVegas’ shares is also a contingent factor. The public tender offer might conclude in the latter half of 2022.
As part of the deal, MGM will pay $6.16 for each share to acquire LeoVegas’ entire share capital. The offer price represents a premium of 44%, more than LeoVegas’ closing share price on 29 April. LeoVegas’ marginal year-on-year revenue growth was $445.1 million in 2021, while its net profit fell by 38.9% compared to 2020.
The deal will help it in creating an iGaming venture on a global scale that will offer its customers several new products, MGM said. The acquisition of LeoVegas will open avenues for MGM’s strategic growth and would supply the latter with a qualified and competent iGaming management team. The deal will also aid the group in gaining better technological capabilities and foster consistent and profitable growth.
MGM and LeoVegas Optimistic About the Deal
Bill Hornbuckle, the CEO and President of MGM was optimistic about the arrangement. According to Hornbuckle, the agreement with LeoVegas aligns with MGM’s ambition to expand its reach within and beyond the European continent, establishing a strong presence in the iGaming market.
Hornbuckle added that the offer is a compelling opportunity for the two companies to collaborate and increase their respective global iGaming growth. Welcoming the LeoVegas team into MGM’s fold, the executive was hopeful about the two companies actualizing MGM’s potential-rich omnichannel strategy.
Meanwhile, LeoVegas has declared that its board of directors recommended its shareholders to accept MGM’s proposal. If 90% of shareholders approve the offer, the agreement might close in the latter half of 2022. The board considered the deal an attractive prospect for the company as it would be empowered to confront any upcoming challenges in the industry.
Influential LeoVegas shareholders led by chairman Gustaf Hagman have consented to vote in support of the offer. Other members like Torsten Söderberg have not agreed to vote in favor of the agreement, despite declaring their support for the acquisition proposal. Hagman holds the largest percentage of shares at LeoVegas while Söderberg holds 4.6% of the shares.
Deal Might Jeopardize MGM-Entain Partnership
However, not everyone is appreciative of the deal. Sports advisory firm Regulus Partners opined that the acquisition might jeopardize MGM’s partnership with iGaming giant Entain. The two companies have a joint venture BetMGM, which has been successful in the United States (US). Regulus believed that Entain is better poised than LeoVegas in offering sports betting services and poker products, given its strong presence in the US.
The firm speculated that since MGM did not refer to Entain in its press release, the acquisition of LeoVegas might make MGM and Entain competitors everywhere except the US. Regulus added that Entain, MGM, and LeoVegas would still compete in Canada, despite the current agreements.