MGM Resorts eyes digital expansion with $607m offer to buy LeoVegas

MGM Resorts has tabled a public tender offer to buy LeoVegas for $607m.

The all-cash bid, which translates to SEK61 per share, represents a 44% premium on the Stockholm-listed operator’s closing stock price on Friday 29 April.

Shares in LeoVegas have shot up 51% on a one-week basis after the offer was made public.

The LeoVegas board of directors has unanimously recommended that shareholders accept the bid, including largest shareholder and CEO, Gustaf Hagman.

The acceptance period for the acquisition is expected to begin around 3 June and expire around 30 August. MGM has said it will not increase the price of the initial offer.

LeoVegas said the company had received plenty of interest, but that MGM’s offer was superior from a shareholder perspective.

The deal will give MGM a substantial online casino presence at a crucial time in the development of the US iGaming market as well as exposure to international markets.

MGM said the acquisition would provide a “unique opportunity for the company to create a scaled global online gaming business”.

It pointed to LeoVegas’ customer base outside of the US, as well as its experienced online gaming management team and superior technology capabilities. The business is run on a proprietary software platform called Rhino.

MGM said the operator’s commitment to continued profitable growth was another attraction. From 2017 to 2021, the compound annual growth rate of LeoVegas revenue was 16%, while it maintained strong profitability over the same period.

MGM Resorts CEO and president Bill 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 realise the potential of our omni-channel strategy.

“We look forward to being able to welcome the LeoVegas team to our MGM Resorts family,” he added.

MGM CEO Bill Hornbuckle: “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.”

The offer meant LeoVegas was forced to publish its Q1 2022 financial results earlier than anticipated.

For the three months to 31 March, revenue increased by a modest 2% to €98.5m. It would have been a 9% rise but for the operator’s withdrawal from the Netherlands.

The business was buoyed by growth in the sports betting vertical (+44%), another add-on for MGM, with the climb primarily driven by Leo’s investment in its acquired Expekt brand.

EBITDA hit €14.1m, up from €10.4m in the same period of last year, corresponding to 35% increase and an EBITDA margin of 14.4%.

The number of depositing customers during the quarter reached 455,843, a decline of 1%.

After the reporting period, revenue in April amounted to €34m, representing an annual rise of 4%.

More to follow…