UK bookie’s mini-M&A lengthens odds of a mega-deal

General view inside a Ladbrokes shop in Harpenden, Britain, March 18, 2020. REUTERS/Peter Cziborra

LONDON, Aug 11 (Reuters Breakingviews) - Entain (ENT.L) is on a dealmaking spree. Jette Nygaard-Andersen, chief executive of the $10 billion UK bookie, has bought five companies this year for over $1 billion in total. Her swoop for Croatia’s SuperSport, announced on Thursday, exemplifies the logic. Entain wants to plant flags across the map so that a regulatory crackdown in one country, like the United Kingdom, makes less overall difference. There are also savings in switching smaller bookies’ systems for Entain’s. Investors bid the Ladbrokes owner’s shares up by more than 5%.

The question is what this all means for Entain’s M&A dance with perennial $14 billion suitor MGM Resorts International (MGM.N), with which it has a U.S. sports-betting joint venture. MGM would like to control its own destiny in that burgeoning market and get its hands on Entain’s technology. But the UK group rebuffed its advances last year. At current market prices, and assuming MGM paid a 20% equity premium, the bigger U.S. group would control 53% of the combined company after an all-share merger, according to Breakingviews calculations. But an unanswered 15% rally for Entain would tip the balance the other way. Nygaard-Andersen’s M&A rampage could make a bigger deal harder. (By Liam Proud)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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