MGM Says 96 Percent of LeoVegas Investors Accept Takeover Offer

Posted on: August 31, 2022, 06:14h. 

Last updated on: September 1, 2022, 12:33h.

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

MGM Resorts International (NYSE:MGM) said today that 96% of LeoVegas AB investors voted in favor of the casino operator’s takeover of the Swedish gaming company.

MGM LeoVegas
A LeoVegas advertisement, seen above. MGM is completing its acquisition of the Swedish company. (Image: The Drum)

The price at which those investors accepted a public tender offer is the equivalent of $5.72 a share, valuing the target at $604 million – slightly less than the $607 million offer revealed in May.

The completion of this transaction represents a major milestone for MGM Resorts as we continue to pursue our strategy of growing our online gaming footprint worldwide,” said MGM Resorts’ CEO & President Bill Hornbuckle in a statement.

“Major milestone” may be hyperbole, particularly for a $604 million acquisition by a $13.46 billion company. Still, there’s no denying the LeoVegas purchase provides the buyer with an effective avenue for European expansion. While the BetMGM brand is highly visible in the US and Canada, it lacks recognition in Europe — one of the world’s most mature gaming markets.

Shrewd Acquisition by MGM

The Mandalay Bay operator is funding the deal with cash on hand, meaning its balance sheet won’t be burdened with new debt simply in the name of dealmaking. There are other perks for the buyer, including that LeoVegas will accretive to MGM’s earnings per share.

In LeoVegas, MGM could add 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.

“LeoVegas has operated profitably as a high-growth platform since 2014. From 2017 to 2021, LeoVegas’ revenues compounded annual growth rate was 16% while maintaining strong profitability. MGM Resorts’ scale, brands, and expertise will allow the combined businesses to expand within existing gaming segments and provide incremental opportunities to enter new areas,” according to the statement.

Settlement of the tendered shares is expected to be finalized on or around Sept. 7, indicating MGM’s initial forecast that the transaction will close in the second half of this year appears accurate.

MGM Targeting Geographic Expansion

Last week, MGM won regulatory approval to acquire the operator of the leovegas.com, slotboss.co.uk, pinkcasino.co.uk, betuk.com, and 21.co.uk brands. The casino giant could become a force in new markets with the acquisition.

“LeoVegas’ online casino and sports betting capabilities and strong customer base outside of the US is expected to further expand MGM Resorts’ presence around the world,” added the buyer in the statement.

MGM has signaled a willingness to make deals, and with BetMGM nearing profitability, more acquisitions could be on the way. However, the company hasn’t overtly signaled it’s currently mulling specific opportunities.