Entain PLC (LSE:ENT) shares climbed 3.4% to 582p on Tuesday after Deutsche Bank flagged that a proposed acquisition of MGM Resorts by People Inc, the renamed IAC, could have positive read-across implications for the FTSE 100 gambling group.
People Inc, chaired by media executive Barry Diller, has proposed a $48.30 per share cash offer for MGM Resorts International, the Las Vegas-based casino and hospitality giant.
This represents a premium of approximately 26% to MGM's share price on 26 May, before Fertitta Entertainment's separate bid for Caesars Entertainment injected fresh deal activity into the US gaming sector.
People Inc currently owns 26.1% of MGM and, on completion, would hold just over 50.1% of the company, giving it operational control.
Entain's connection to the MGM bid lies in BetMGM, the online sports betting and gaming joint venture the two companies operate together in the United States, one of the fastest-growing regulated gambling markets in the world.
Any change of control at MGM inevitably raises questions about the future structure and ownership of BetMGM, and Deutsche Bank argues the bid provides a degree of share price support for Entain given the potential for corporate activity to crystallise value in that partnership.
Deutsche's analyst Richard Stuber maintains a buy rating on Entain with a target price of 1,028p, implying significant upside from current levels.
Diller framed the MGM approach in strategic terms, arguing the casino group possesses physical assets that artificial intelligence cannot easily replicate and significant digital growth potential that People Inc believes it can help unlock.
The proposed deal remains at an early stage and is subject to board and regulatory approvals.