US casino operator MGM Resorts has strengthened its hand in the global online gaming world after announcing plans to acquire Swedish online gaming firm LeoVegas in a $607m deal which has already been unanimously recommended by the LeoVegas board.
MGM’s offer is a 44.1 per cent premium on the LeoVegas closing price of SEK 42.32. MGM Resorts believes the acquisition of LeoVegas will provide a unique opportunity for the company to create a scaled global online gaming business.
MGM Resorts’ CEO & President Bill Hornbuckle explained: “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 U.S., 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.”
MGM has identified three key reasons for the acquisition; strategic opportunities to accelerate growth and product offerings outside of the US; the presence of an experienced online gaming management team and superior technology capabilities; and a commitment to continued profitable growth given it has operated profitably as a high-growth platform since 2014.
Headquartered in Stockholm, LeoVegas has licences in eight jurisdictions primarily in the Nordics and rest of Europe. LeoVegas generated 393m euros ($413m) in revenue and 48m euros ($50.5m) in adjusted EBITDA during the last twelve months ended March 31, 2022.
LeoVegas has also registered as a gaming operator in the Canadian province of Ontario, which is a step in the license process to be able to conduct gaming in the regulated environment in Ontario. On 4 April, the gaming market was re-regulated and the LeoVegas and Royal Panda brands were re-launched on the same day that the market opened.
The Board of Directors of LeoVegas has given consent to MGM to offer a management incentive plan for certain key employees of LeoVegas and notes that MGM has obtained a statement from the Swedish Securities Council confirming that the proposed incentive plan is compatible with the Takeover Rules.
Gaming advisory group Regulus Partners suggested it was an all round good deal: “Despite a significant premium to recent and current trading (77 – 44%), the proposed price is attractive to the acquirer as well as the acquired, in our view. Indeed, rarely for recent online M&A, it will be accretive to MGM.”
What will be interesting to see is how this deal will change MGM’s working relationship with Entain for their successful BetMGM joint venture in the US market. Having the LeoVegas portfolio and expertise on hand puts the two partners head to head in a lot of international markets and also makes MGM marginally less reliant on Entain in the online gaming sphere.