Sport of Kings goes West
There is a great deal not to like about the £8.1bn bid by casino operator MGM for entain, owner of the bookies Ladbrokes and Coral, and a pioneer of sports betting technology.
Britain has long been the home of sports betting and Ladbrokes, the Queen’s favourite bookmaker, is much a part of the UK’s blood stock heritage as royal Ascot, Cheltenham and epsom. The very idea of Las Vegas gambling bosses, in wide ties and shiny suits, occupying hospitality boxes and tents at these quintessentially British events will give traditionalists conniptions.
Britain’s more traditional gambling industry moved away from its legacy when it embraced online gaming and introduced ‘crack cocaine’ gaming machines into betting shops up and down the land.
The morality of that, and the addiction and mental and social harm which followed, is unlikely to cause anxiety in Las Vegas. The desert city has thrived on the back of slot machines and is licking its lips at the prospect of buying the UK’s sports betting expertise.
When America’s big casino franchises signed deals with the UK sports betting experts post-2018, after the US Supreme Court gave the green light to sports betting, it became inevitable that they would eventually seek control. William hill shareholders approved a £2.9bn takeover by the owners of Caesars Palace last year. The idea is to integrate the sports books of the two companies, creating a sports betting behemoth operating 170 venues across 15 states.
If MGM is successful the only big gambling group with a London Stock exchange float will be Flutter entertainment, owner of Paddy Power, Betfair, Fan Duel and Canada’s Stars Group.
As much as online gambling and ‘ crack cocaine’ gaming machines changed the sports betting industry for the worse, abandoning it to foreign ownership will be a loss.
Much of the technology involved has been engineered in the UK and sports betting is part of the nation’s services and cultural DNA. The UK has a sophisticated licensing system, the industry is a big employer and generates useful profits for exchequer. how that will be impacted by US control is unclear but is certainly worth scrutiny.
The MGM offer for entain may look like a big number but is less alluring when broken down. entain chairman Barry Gibson is right to reject it, claiming it ‘significantly undervalues’ the company.
That phrase, beloved in contested takeovers, is normally an invitation to raise the offer and all will be well. Shareholders should be wary.
Some UK institutions will not be able to hold MGM shares, because of fund-listing rules, but will be loath to give up on an upside having supported GVC, now entain, as it grew.
If 2021 is to be a year of M&A, this deal may not be the best place to start.
Nelson’s bullet
BILLIONAIRE investor Nelson Peltz last made headlines in Britain because of the betrothal of his daughter Nicola to Brooklyn Beckham.
As the financier who launched Cadbury on the road to overseas ownership by Kraft, he has a special, if not honoured, place in UK corporate folklore. In much the way as he encouraged Cadbury to ditch Schweppes, making the chocolatier a tasty morsel, he is now doing the same for plumbing merchant Ferguson. Peltz’s Trian fund, which owns 5pc, is the moving force behind Ferguson’s decision to sell its UK arm for £308m to US private equity outfit Clayton, Dubilier & rice.
having ditched the Wolseley name for Ferguson, and sold its British arm, next on the agenda for Peltz and the compliant Ferguson board will be switching its London quote to New York. That is a long standing ambition which so far has been thwarted.
With friends like Peltz exploiting the FTSE 100 discount, there will be even fewer investment choices for UK funds.
Lloyds probes
NEW Financial Conduct Authority chief executive Nikhil rathi did a terrific job in getting official reports into the collapses of London Capital & Finance and Connaught out of the door unexpurgated.
If he really wants to demonstrate that he is a new broom he should publish the findings of the long delayed report on management culpability for the HBOS collapse before it was saved by Lloyds.
It is also time that the probe into who knew what and when at Lloyds, at the time of the massive fraud at HBOS’s former branch in reading, were released.
You can do it, Nikhil.