Entain – robust rebuttal of MGM offer

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Entain plc, the global sports-betting and gaming entertainment group, has reported trading for the financial year to 31 December 2020 as well as the period from 1 October to 31 December 2020, the fourth quarter.

Entain reported total fourth quarter net gaming revenue (NGR) growth of 7% at constant exchange rates. That was driven by very strong online results, with sports betting out performing gaming, and means full year NGR has risen 1% at constant exchange rates.

The group also announced the appointment of a new CEO, with non-executive director Jette Nygaard-Andersen to step into the role.

Shay Segev, Entain’s outgoing CEO, commented: “In an exceptionally challenging year, our strong performance has been driven by a business model that is highly diversified across a wide range of products, brands, territories and channels.  Q4 has been another successful period for us, and we are particularly pleased with the momentum that we are seeing in the US.  BetMGM continues to go from strength to strength and is now live in 11 states, plus Michigan will be launching online tomorrow.

“As ever, we remain deeply aware of our responsibility to provide our customers with the safest possible experience while using our products, and to that end our new technology-based Advanced Responsibility and Care programme is heralding a new era in player protection.

“While the short-term outlook remains uncertain as a result of the ongoing impacts of COVID-19, we have entered 2021 with good momentum and remain as confident as ever in Entain’s longer term prospects.”

Industry Reaction

Nicholas Hyett, Equity Analyst at Hargreaves Lansdown: “Having rebuffed MGM’s takeover bid and lost its CEO, Entain needed a robust set of results in the final quarter of the year to settle investor nerves. These numbers look to have delivered and kept the shares trading some way above where they were before MGM’s offer was made. It’s evidence that the Entain board may have been justified in arguing the MGM offer “significantly undervalued” the group – particularly given the very strong result from the US joint venture.

“While the 130% increase in US online revenues is the standout number, double digit growth was spread across markets from Georgia to Brazil. BetMGM may be the jewel in Entain’s crown, but it’s by no means the only gold in the treasury. With a relatively modest debt position the group can continue to invest in its global footprint going forwards.

“The next 12 months or so will be interesting to watch. On the one hand the end of lockdowns around the world will probably hit online sports betting as customers turn to other forms of entertainment. On the other, sports events will be back on track and structural growth in the US and elsewhere will continue. Overall, we think the group remains well placed even without an MGM offer,”

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