MGM Resorts International Tenders Offer to Acquire LeoVegas

As one of the biggest players in the legal US gambling industry, MGM Resorts International is heavily involved in all aspects of gaming. This includes Las Vegas Strip casino resorts to online sports betting and iGaming through BetMGM.

Turning its attention to the global regulated gaming industry, the company’s latest move puts an exclamation point on this aspect of the business. MGM Resorts International has offered $607 million to acquire LeoVegas AB.

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MGM Resorts International Online Gaming Footprint

The move to add LeoVegas to the company’s holdings confirms MGM’s commitment to the online gaming segment. The largest land-based casino operator in Las Vegas is looking to expand the company’s presence in legal mobile gambling.

The offer adds up to $6.20 a share for the Swedish-based online gaming company. The terms of the deal call for an all-cash purchase. The acquisition is expected to increase MGM’s earnings per share.

One of the most attractive aspects of this deal is the balance sheet at LeoVegas. A rarity in the US online gaming division, this European iGaming company has been profitable.

Revenue for the year ending March 31, 2022 has been reported as $414.24 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $50.59 million.

MGM CEO Bill Hornbuckle released the following comments as part of a company statement:

“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.”

MGM Resorts and the European Gaming Market

Part of the synergy tied to this deal is MGM Resorts recent move into the Canadian online sports betting and iGaming industry in Ontario. BetMGM is the result of a 50/50 partnership between MGM Resorts and the UK’s Entain Plc.

LeoVegas is part of the expansion into Ontario through that company’s mobile sportsbook and iGaming casino app. This is in addition to eight gaming licenses across Europe’s regulated gaming industry.

The fact that LeoVegas has a heavy interests in legal online sports betting would act as a complement to the existing BetMGM brand. Also part of the company statement was the following insight:

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

Founded in 2011 by Gustaf Hagman and Robin Ramm-Ericson, Leo Vegas has maintained a profitable track record since 2014. The company’s growth rate from 2017 through 2021 has been impressive at 16%.

MGM Resorts Strong Bottom Line

At the close of 2021, it was reported that MGM was sitting on $4.8 billion in cash. The company also had $1.67 billion in undrawn credit. The strength of this balance sheet made it easy to tender an all cash offer for LeoVegas.

The strong cash position can be attributed to the $17.2 billion sale of MGM Growth Properties as the real estate arm of the company.

It everything does according to plan with gaming regulators and other regulatory bodies, the deal to buy LeoVegas is expected to close by the end of August this year with settlement in September.

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