The window for MGM Resorts International (NYSE: MGM) to submit another acquisition bid for Entain Plc (OTC: GMVHY) may be closing, according to Jefferies analyst James Wheatcroft. In a recent note to clients, Wheatcroft downgraded Entain from “buy” to “hold” and decreased his price target on the gaming stock, citing the company’s investments in BetMGM and higher interest costs.
MGM previously made an $11.06 billion bid for Entain in January 2021, but the offer was rejected. Speculation that the Las Vegas-based gaming company would increase its bid never materialized, and Wheatcroft believes that the company’s full plate of priorities could further delay another acquisition attempt.
MGM has expressed interest in acquiring the remaining 50% of BetMGM that it does not already own, and executives have indicated that another bid for Entain is not currently in the works. Additionally, Entain CEO Jette Nygaard-Andersen hinted at the Global Gaming Expo (G2E) in Las Vegas that BetMGM’s ownership could change in the future, suggesting that a joint venture may not last forever.
In addition to its potential acquisition pursuits, MGM faces other pressing matters, such as recovering from a recent ransomware attack and hosting the Las Vegas Gran Prix. Wheatcroft noted that these events could distract the company from evaluating acquisitions, potentially delaying any bid for Entain.
Although MGM recently announced a new $2 billion share repurchase program, Wheatcroft believes that the company’s dedication to buying back its own shares does not necessarily rule out the possibility of making another offer for Entain. However, with interest rates high, MGM may be hesitant to tap debt markets to fund an acquisition and may have other ways to deploy its capital without making a large investment in its BetMGM partner.
In conclusion, Wheatcroft’s analysis suggests that MGM’s current commitments may delay any potential bid for Entain, indicating that it could be some time before the company considers another acquisition attempt.