Could Flutter Entertainment Be Next?
Following the announcement on Monday 4th January that MGM Resorts had posted an initial offer of some £8.1 billion ($11 billion) for Entain that has currently been rejected by the owner of brands such as Ladbrokes, Foxy Bingo and Gala it is expected that the US Casino giant will come back with another offer before the deadline of 1st February.
Last year saw the acquisition of William Hill another UK gambling firm to Caesars Entertainment for £2.9 billion and MGM has seen the value of buying another online operator that has already a firm footing in the growing US online gambling industry particularly in sports betting.
Both US operators have seen a major impact on their core land based businesses since the COVID-19 pandemic and both want to grow their online gambling footprint in the US and it seems that British is best when it comes to that area.
Many analyst’s see the Entain deal with MGM Resorts as not a matter of “if” but more of “when”, it all comes down to money and Entain are in a superb position, knowing that MGM Resorts needs them more than they need MGM.
But it is a good fit, Entain get a more pronounced profile in to the US online gambling business and MGM get a company that are all ready to go into a sector they desperately need to grow to offset the damage the pandemic has done to their bottom line.
So with William Hill already a done deal with Caesars and Entain just a matter of time with MGM Resorts who would be next? Well the giant in the room is Flutter Entertainment, but that would take some doing, the company has a market capitalisation of £20 billion and would need something well in excess of that to interest its shareholders.
Flutter Entertainment are massive, they have acquired brands such as PokerStars, Sky Betting & Gaming and most recently Fanduel. That along with the brands they have already in PaddyPower and Betfair make them the worlds largest player in the world of online gambling.
So who stateside could afford such a company? Well truly no-one but that generally does not stop some, any deal to acquire Flutter would have to involve major equity involvement and the one company that is not in play at present is Wynn Resorts. It has a market capitalisation of $12.2 billion and any consideration would be a major gamble for both sides given the equity the US operator would need to raise.
The biggest would be Las Vegas Sands with a capitalisation of $45 billion and could have a move for Flutter but that would not fit for its major shareholder Sheldon Adelson, he does not like online gambling at all and would need a major swing in opinion for that to happen, not just that but it seems Las Vegas Sands are more interested in Australia at present with Crown Resorts in its sights.
So Flutter Entertainment may go it alone and build its own path forward in the US, the only possibility would be a Macau operator or could Genting the Malaysian giant consider Flutter? It does have a growing presence in the US casino industry and may see Flutter as a chance to enter the US online gambling industry, especially sports betting.
Do they have the funds for such a move? Indeed they do and raising those funds would not be seen as a stumbling block either, indeed with their struggles with their casino resort business many investors could see the move as a positive for Genting.
Any possible move for Flutter Entertainment would be a huge deal for any company but maybe Flutter Entertainment have their own ideas on that.
2021 has got off to a big start with the Entain approach by MGM Resorts and there very well could be more to come in the year.
