MGM Wins Regulatory Approval for LeoVegas Acquisition

Posted on: August 20, 2022, 05:23h. 

Last updated on: August 20, 2022, 07:40h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

MGM Resorts International (NYSE:MGM) has announced it won regulatory approval for its acquisition of Sweden’s LeoVegas AB.

MGM LeoVegas
A promo for a LeoVegas online casino. MGM won approval to acquire the company. (Image: Twitter)

The Bellagio operator said in May it offered $607 million in cash to purchase the Swedish gaming company and sportsbook operator. MGM is paying for the deal with cash on hand.

The completion of the Offer is subject to the conditions stated in the Offer Document, including the receipt of all regulatory, governmental or similar clearances, approvals and decisions that are necessary to complete the transaction. MGM has received all relevant approvals,” according to a statement. “Therefore, the condition regarding the receipt of all necessary regulatory, governmental or similar clearances, approvals and decisions is fulfilled.”

MGM is offering $6.20 a share for LeoVegas and expects the acquisition will be accretive to earnings per share. The transaction could close by the end of this year.

Regulatory Win Is Meaningful

Regulatory approvals are often perfunctory elements in the acquisition process. But LeoVegas wasn’t without some potential causes of concern.

In June, Sweden’s Economic Crime Authority (SEC) launched a probe into possible insider trading in LeoVegas stock ahead of MGM announcing its takeover proposal. The gaming company’s Stockholm offices were raided and the operator later said it’s cooperating with the investigation.

Earlier this month, LeoVegas was hit with a $1.6 million penalty by the UK Gambling Commission (UKGC) for not adhering to anti-money laundering rules. The operator dealt with a similar fine in Denmark last October.

Despite the controversies, MGM is undaunted and never signaled it would abandon its efforts to acquire the operator of the leovegas.com, slotboss.co.uk, pinkcasino.co.uk, betuk.com, and 21.co.uk brands, among others.

“As previously announced, the acceptance period for the Offer expires on 30 August 2022,” according to the press release. “Settlement for shares tendered in the Offer will take place as soon as MGM announces that the conditions for the Offer are fulfilled or if MGM otherwise decides to complete the Offer. Provided that such announcement is made no later than on 31 August 2022, settlement is expected to be initiated on or around 7 September 2022.”

LeoVegas Could Be Smart Buy for MGM

While LeoVegas has limited exposure in the US — a market in which BetMGM is the dominant internet casino operator and one of the largest online sportsbook providers — the transaction could still pay dividends for the buyer. That’s particularly in terms of expanding awareness of the venerable MGM brand in Europe.

In LeoVegas, MGM adds not only a familiar name to the European online gaming scene, but a profitable one as well – a rarity in the US iGaming industry. For the year ending March 31, 2022, LeoVegas generated revenue of $414.24 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of $50.59 million, based on current exchange rates.

With LeoVegas, MGM gains enviable positioning in Europe, where the target has eight gaming licenses in the Nordic region and across the continent. LeoVegas is also a well-known sportsbook operator in Europe, indicating a purchase by MGM could fit in well with the suitor’s BetMGM business.