MGM Resorts International has offered to buy Swedish online casino company LeoVegas for around $607 million (£482m or €576m).
Released on Monday May 2, the announcement was made by the land-based gaming giant as they carry out their goal of expanding their online gambling presence in Europe.
MGM shall pay SEK61 per share to acquire all of LeoVegas' share capital, which the latter noted was a premium of 44% compared to LeoVegas' closing share price on April 29. The operator said it will finance the deal through its existing cash reserves.
MGM's main motives for acquiring LeoVegas:
- To be able to grow and provide offers beyond the US
- To have an experienced online game management team and excellent technology
- To strive for further profitable growth, given that since 2014 it has been operating profitably on the fast-growing ace platform
Chief executive and president of MGM Resorts Bill Hornbuckle said that the deal would enable MGM to offer online gambling across Europe and elsewhere. The operator currently offers the BetMGM online product in North America through a joint venture with Entain, a business MGM proposed an offer to acquire last year.
Hornbuckle said, "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. 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 realize the potential of our omnichannel strategy. We look forward to being able to welcome the LeoVegas team to our MGM Resorts family."
Other leading LeoVegas shareholders, including biggest chairholder and chairman Gustaf Hagman have promised to vote in favor of the deal. Joined together, these shareholders own 15.3% of LeoVegas. Board member Torsten Söderberg, who owns 4.6% of the business, did not agree to vote for the deal, but "has stated that he is very supportive of the offer".
Given the challenging realities of the modern gaming industry, the LeoVegas board said that the deal made sense for both businesses, "LeoVegas operates in an industry which is characterized 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."
Regulus Partners pointed out that the deal raised questions about MGM's relationship with Entain going forward.
Regulus said, "The obvious elephant in the room is the BetMGM JV with Entain. Entain is successfully embedded in all major US states, has joint ownership of the BetMGM brand and is far more capable than LeoVegas in sportsbetting and poker product categories.
"Entain is not mentioned in MGM's press release, which perhaps tells its own story. The narrative is currently of a complementary non-US strategy, but by owning LeoVegas MGM will clearly compete with Entain everywhere but the US, while the three will be going head-to-head in Canada."
If approved by 90% of LeoVegas shareholders, the deal is expected to close in the second half of 2022.