Speculation mounts on the next M&A move of Entain Plc; following weekend reports that the FTSE100 gambling group is preparing a $1 billion (€890m) takeover of Olympic Entertainment Group (OEG).
Entain’s new target was disclosed by Bloomberg, citing “sources who wish not to be identified, as the information is private”. Yet, neither Entain nor OEG have issued statements acknowledging any deal developments.
A takeover of OEG would see Entain become the outright market leader within the Baltic gambling markets of Estonia, Latvia and Lithuania, in which OEG operates 100 Olympic Casino points and its flagship betting brand OlyBet.
Entain began its Baltic expansion last spring, executing a €370 million buyout of Enlabs AB, adding OEG’s primary online gambling rival Optibet to its European multi-brand portfolio.
Further headway into Baltic and Eastern European markets is required by Entain, as Q3 updates detailed costly Western European market adjustments across the board, as gambling PLCs accommodated new regulatory regimes in the Netherlands and Germany and await further reforms to be sanctioned in the UK, Spain and Sweden.
The sale of OEG has been deemed as a likely outcome following the collapse of owner Novalpina Capital. The London PE fund seeks to settle a dispute between founders and investors related to its fund management, investment control and voting rights.
In 2018, Novalpina acquired OEG from company founder Armin Karu and business partner Jaan Korpusov for €300 million. The deal was executed by Novalpina’s Luxembourg-based strategic vehicle Odyssey AS and saw OEG delisted from the Tallinn Nasdaq Exchange.
Bloomberg’s report outlined that Entain had multiple options in how it could structure a deal with a ‘dysfunctional Novalpina’ – in which the FTSE firm may acquire individual market-by-market assets to better suit its Eastern European growth plans.
Irrespective of OEG’s deal outcome, the market anticipates a critical end-of-year for Entain, as US wagering partner MGM Resorts is expected to show its hand on a takeover approach to be scrutinised once again by Entain’s board.
Last January, Entain rejected MGM’s $11 billion bid (1,383 pence per share offer) – a bid Chairman Barry Gibson refused to put forward to investors, citing that MGM had “significantly under-valued Entain’s future prospects”.
Gibson’s judgement was proved right, as this summer US rival, DraftKings proposed a £28 per share offer, valuing Entain at £18 billion. DraftKings would shelve its approach, leaving industry analysts to ponder how MGM will revalue and structure its upcoming deal.
Global gambling’s never-ending M&A narrative has tasked MGM governance with pricing-up US wagering’s hyper-growth trajectory against the backdrop of compliance-burdened European marketplaces to strike a deal that will redefine the sector’s future make-up.