igamingnext photo
Entain shares slumped 4% in early trading today (14 February) after the CEO of MGM Resorts again ruled out making an acquisition bid for the firm.

The decline in Entain’s share price throughout 2023, as well as the ousting of CEO Jette Nygaard-Andersen, led to a fresh round of speculation in the autumn that MGM might make another acquisition bid for the company.

The Ladbrokes-Coral operator originally rejected a 2021 acquisition bid that gave the business an enterprise value of £8.1bn.

That figure now represents a significant premium on the company’s current £6bn market cap.

MGM CEO Bill Hornbuckle was asked yesterday on the company’s Q4 earnings call whether anything had changed since the company’s last public comments on the matter, when it ruled out a bid.

MGM to focus on product not M&A

Hornbuckle answered that product would be the company’s main focus in the year ahead, as opposed to any large-scale M&A.

“I was at ICE last week. I met with Stella, our partner. We’re still very focused on making sure everyone’s focus is on BetMGM.

“And particularly, this is a critical year, I think, for all of us. So, it’s about product, product, product, and focus. And so that remains the focus for now,” he said.

Following the comments, Entain’s share price fell close to 4% to £9.22 before recovering slightly to £9.84.

Entain has faced pressure from activist investors in recent months due to faltering core markets, a stagnant share price and poorly received M&A deals.

Last summer, CEO of Eminence Capital Ricky Sandler called for the business to consider options including a possible divestment from the BetMGM joint venture to realise shareholder value.

After a successful activist campaign, Sandler received a seat on the board, including on the important Capital Allocation Committee.

This has been considered by some as the business signalling its support for the activist’s agenda.

BetMGM’s investment year

During a December investor presentation, BetMGM CEO Adam Greenblatt said 2024 would be an “investment year” as the JV attempted to regain lost market share and improve its product.

Hornbuckle provided more colour on how MGM is looking at this.

“Look, I think the answer is yes, you’re spot on. This will be a reinvestment year,” he said.

“Obviously, you’ve seen we’ve lost share, literally, in both instances. And the two folks that sit above us were being outspent two, two-point-five to one in terms of raw marketing spend in dollars.

“We want and need to get our product in a better and different shape. We want more parlays.

“Obviously, the acquisition of Angstrom by our partner will be a big add to that. We’ll be able to stick out more product. We’ll have more confidence in it. Speed to market will be better, etc.

“And so that’s part of what will be developed, starting with baseball this year. We hope by the time we hit football next year, a lot of the product differentiators we hope to have will be in play.

“We hope to have a single wallet in play, as I mentioned in my prepared comments, this spring here. But ultimately, [we’ll have] a development year this year, and [will] begin to see [the business] making some cash next year.”

Similar posts