MGM makes $607M bid to buy LeoVegas eyeing online gaming segment global expansion

Casino and hospitality giant MGM Resorts International has announced an offer to acquire online gaming operator LeoVegas. The Nevada-based heavyweight has commenced a public tender offer for 100% of the shares of the Swedish business at a price of SEK 61.00 in cash per share, equivalent to a total tender value of approximately $607 million.

The acquisition is set to advance MGM Resort’s strategy for the digital gaming segment, expanding it internationally. The transaction will be financed with existing cash and is expected to be accretive to MGM Resorts’ earnings and cash flow per share.

"Our vision is to be the world's premier gaming entertainment company, and this strategic opportunity with LeoVegas will allow us to continue to grow our reach throughout the world," said MGM Resorts' CEO & President Bill Hornbuckle. "We have achieved remarkable success with BetMGM in the U.S., and with the acquisition of LeoVegas in Europe we will expand our online gaming presence globally.”

LeoVegas’ global presence, strong team and technology capabilities are expected to drive MGM Resorts’ iGaming and sports betting international development, a press release says. Nasdaq Stockholm-listed LeoVegas was founded in 2011 by Gustaf Hagman and has licenses in eight jurisdictions, primarily in the Nordics and rest of Europe.

MGM Resorts' Bill Hornbuckle

The iGaming company’s Board of Directors has now unanimously recommended shareholders accept the public offer in a new statement. LeoVegas explains that, in parallel with other interested third parties contemplating public tender offers, MGM first contacted the company in December 2021.

“LeoVegas has received several indications of interest or non-binding offers concerning a potential tender offer. MGM’s offer is, in the assessment of the LeoVegas Board of Directors, the superior offer from the perspective of the shareholders,” LeoVegas’ Board of Directors said.

“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,” added Hornuckle. “We look forward to being able to welcome the LeoVegas team to our MGM Resorts family."

During the last twelve months ended March 31, 2022, LeoVegas generated €393 million ($413.5 million) in revenue and €48 million ($50.5 million) in Adjusted EBITDA. The business is headquartered in Stockholm, with offices in Malta, United Kingdom and Milan.

MGM Resorts believes this acquisition will provide a unique opportunity for the company to create “a scaled global online gaming business.” The deal unlocks a strategic opportunity to accelerate growth and product offerings, given LeoVegas’ gaming and sports betting capabilities and strong customer base outside of the US, which will expand MGM’s global presence.

MGM’s online gaming endeavors will benefit from an experienced management team and “superior technology capabilities,” due to LeoVegas’ robust and scalable technology platform. The Nevada business further sees a commitment to continued profitable growth in this deal, as the Swedish business 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, a press release explains. 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.”

The acceptance period of the offer is expected to commence on or around June 2022, and expire on or around August 2022. An offer document regarding the offer is expected to be made public “shortly before the commencement of the acceptance period.”

Assuming that the offer is declared unconditional no later than around end of August 2022, settlement is expected to begin around early September 2022. The offer is subject to regulatory approvals, receipt of valid tenders of more than 90% of LeoVegas’ shares, and customary closing conditions. It is expected to be completed during H2 of fiscal year 2022.

In regards to the impact the transaction will have on LeoVegas in terms of employment, the business says the Nevada gaming giant has stated that “MGM values the skills and talents of LeoVegas’ management and employees” and “intends to continue to safeguard the excellent relationship” that the business has with its workers.

“Given MGM’s current knowledge of LeoVegas and in light of current market conditions, MGM does not intend to materially alter the operations of LeoVegas following the implementation of the offer,” the company told LeoVegas. “There are currently no decisions on any material changes to LeoVegas’ or MGM’s employees and management or to the existing organization and operations, including the terms of employment and locations of the business.”

VICI completes MGM Growth Properties acquisition

On Sunday, MGM announced the closing of a previously announced transaction with real estate investment trust VICI Properties Inc. VICI has closed its acquisition of MGM Growth Properties (MGP) -MGM's own REIT- which now makes it the largest owner of hotel and conference real estate in America, with an estimated enterprise value of about $44 billion.

"Our partnership with MGP over the last six years has provided significant value to our shareholders and I would like to thank the MGP team and its leadership for their efforts throughout this process," said Bill Hornbuckle, Chief Executive Officer and President of MGM Resorts.

As part of the transaction, the existing master lease was amended and restated and provides for an initial term of 25 years, with three 10-year renewals, and an initial annual rent of $860 million. Following the transactions, MGM Resorts owns an approximately 1% stake in the VICI operating partnership.    

"This transaction has provided us with significant financial flexibility that will allow us to continue to invest in and grow our business to further maximize shareholder value," added the executive. " We look forward to a productive relationship with VICI."

By completing the $17.2 billion acquisition of MGM Growth Properties LLC, VICI has added 15 marquee assets -expanding its real estate portfolio to 43 Class-A properties- and increased annual rent by over $1 billion.