Harry Barnick, senior analyst for leisure sector companies at Third Bridge, believes any $11bn acquisition of Entain would help MGM Resorts International compete in the online market.
The US and Macau operator has made a bid for betting and gaming giant Entain (previously GVC Holdings), reported to be in the region of $11bn.
While Entain has stated the offer «seriously undervalues» its shares, the company’s share price has soared since news of the offer was publicised.
In quotes sent to Gambling Insider, Barnick said: «Entain has a rich history of operating sports books and this will be highly attractive to MGM Resorts as it looks to grow its sports betting offering in the US.
«MGM Resorts will also be keen to cross-sell its existing land-based customers into the sports betting offer.
«Key synergies include the cross-sell opportunity from MGM Resorts’ land-based casino operations into Entain’s sports betting offer.»
Any Entain purchase would aid MGM Resorts’ ability to compete with DraftKings and FanDuel in the digital sphere, according to Barnick, while it would also offset «the competitive threat» from Caesars Entertainment’s acquisition of William Hill.
However, while Caesars has announced it will be selling off William Hill’s European assets, Barnick feels this remains a big unanswered question in the Entain-MGM Resorts case.
He explained: «The acquisition will improve MGM Resorts’ chances of competing with power-houses DraftKings and FanDuel, as well as offsetting the competitive threat from Caesars’ acquisition of William Hill.
«Big questions remain over whether MGM Resorts will seek to integrate Entain’s UK and European assets or spin these off to an outside investor.
«Similarly, shareholders may worry that the current US partnership could be at risk if no deal is struck».