MGM moves to acquire LeoVegas
MGM acquires LeoVegas, read all about it. LeoVegas is unlikely to be a name that is known in the states. As a European casino operator, it has built a brand that is well known across the continent and has a host of customers in the UK. Based in Sweden, the company has made great progress in the UK and operates casinos under a section of names. All of these are instantly recognizable and are ones that players have grown to enjoy and trust. That’s not to say that LeoVegas has been without its issues.
As we shall see shortly, there has been more than one occasion where LeoVegas has found itself in hot water. There was a real possibility that certain issues may well have done away with any real chance of a deal, but it appears that MGM was able to look beyond these.
As a dominant force in the US, MGM’s move to acquire LeoVegas may not make sense immediately. However, as we shall see, this is a deal that has the potential to create a whole host of benefits for the company. Let’s have look at just what the deal is and what it’s likely to mean for MGM in the future.
MGM acquires LeoVegas – A look at the deal
It was in May of this year that MGM made its offer to take over the Swedish gaming operator. The offer would include acquiring the online casinos as well as the sportsbooks that are operated by LeoVegas. The offer to buy these was a whopping $607 million, as a cash purchase. The great news is that MGM has won regulatory approval and so it appears that the deal is set to go ahead.
With the price that has been agreed upon, this equates to $6.20 per share. The hope is that the deal will be all done and dusted by the end of the year, but there are some provisos that need to be met first.
Causes of concern
It would be wrong to claim that this was all plain sailing. There were times when it appeared that a deal would not be reached and, generally, this was down to issues that existed on the side of LeoVegas. There were two particular issues that were hugely significant.
Firstly, LeoVegas experienced issues in June of this year when it was raided by Sweden’s Economic Crime Authority. An investigation was launched into the possibility of inside trading before MGM had made its announcement about its intention to buy. While reports state that LeoVegas is assisting with the investigation, we are yet to see any result and establish if there has been any wrongdoing.
There were also issues for LeoVegas over in the UK. Here, it was fined $1.6 million by the UK Gambling Commission after it failed to adhere to anti-money laundering rules. This may be seen as unfortunate or even an error of judgement. However, this wasn’t the first time that the company had found itself on the end of a fine. It was only last October when the operator was hit with a similar fine, only this time it was in Denmark.
Regardless of these issues, MGM never gave the slightest hint that was looking to walk away from the deal. As well as the LeoVegas name, the deal would also see MGM acquiring:
- Pink Casino
- Bet Uk
MGM clearly sees the value in these brands and that is why it was not put off by the breaches of legislation that occurred. In fact, since these issues, MGM has released a statement reaffirming the deal and showing its commitment to complete.
MGM acquires LeoVegas: a smart move for MGM
In the US, MGM is the dominant force when it comes to online casinos and sports betting. With BetMGM being the company´s flagship in the online segment. When it comes to LeoVegas, this is a company that has had limited exposure in the states and is hardly a household name. That being the case, it’s more than reasonable to question why MGM is so intent on this acquisition and what it will actually gain.
The benefit that MGM is like to experience is brand awareness across Europe. LeoVegas is a familiar name and, by being associated with this, MGM will soon become a brand that is recognized too. Something else that makes this a smart move is the fact that LeoVegas is particularly profitable.
In the US, iGaming isn’t always the most profitable of markets. By acquiring LeoVegas, MGM is tapping into existing successes and healthy books. For the year ending March 2022, LeoVegas reported revenue of $414.24 million. In terms of profit, these came out at an impressive $50.59 million. When you consider those figures, it makes sense that MGM would want in.
Beyond these profits, it’s also worth considering the sports betting element. MGM is already successful in this arena, but by acquiring LeoVegas it is expanding its offerings in this area too. The existence of this and the casinos combined make LeoVegas a great fit with the MGM brand.
A timely update
In the process of reviewing this acquisition, MGM posted an update of its own. This was the fact that all conditions of the purchase had been met, LeoVegas shareholders had accepted the offer, and the deal should complete within the second week of September.
The statement from MGM refers to the fact that it is working towards becoming a world leader in iGaming and sportsbooks. Acquiring LeoVegas takes the company one step closer to achieving this.
It will be interesting to see how MGM now moves forward with LeoVegas. While it will clearly benefit from exposure in Europe, there is also the chance that the Leo brand will be taken to the US. The timing could be perfect for MGM right now as more and more states are reviewing their approach to iGaming. If these states start to take action, the online casino market could be about to explode and MGM, along with the LeoVegas brand, will be perfectly positioned to make the very most of this opportunity.