Entain Rejects MGM’s $11BN Takeover Offer as it “Undervalues the Company”

Ladbrokes operator and owner, gambling company Entain Plc, has rejected the $11 billion takeover offer from MGM Resorts International.

The official reasoning behind this is that the offer undervalues the UK company that is experiencing the online betting surge.

Not Enough

Entain investors would, under proposed terms…

…exchange the stocks for 0.6% of MGM’s share and would hold about 42% of the combined business.

This was said in London-headquartered company’s official statement on Monday. This outperforms the earlier all-cash bid from late last year.

An eventual merger between two entities would give MGM a full control of the US venture with Entain, during online gaming’s unprecedented growth at the moment.

This would “expand and diversify the company’s operations, product offerings and earnings” as the operator said in another statement.

Sports betting market in USA will grow five times in size by 2024 to $8.4 billion. This is an estimate by Vixio Gambling Compliance consulting company.

No Certainty for Official Bid

Coming from MGM’s side may be a limited partial cash alternative to British brand’s stakeholders. This will be partially funded by the largest shareholder Barry Diller.

MGM has until February 1st to issue a formal bid. The company has said that it is not certain that it will happen.

The deal values Entain at 1382 pence a share, which soared in value by 25%.

MGM, the largest casino operator on the Las Vegas Strip, formed a joint venture in 2018 with Entain, the same year the U.S. legalized sports betting. Formerly known as GVC Holdings Plc, Entain is behind an array of online gambling sites and brands, including Ladbrokes Coral and Bwin, which have become increasingly attractive since.

MGM’s joint venture with Entain could prove crucial if more suitors arrive. This takeover/merger is just another in the string of possible deals of this kind happening in the industry as of late, as Caesars Entertainment’s takeover of Flutter Entertainment is also underway, while Stars Group was also acquired.

Entain shares gained 28% last year before MGM’s offer was made public, giving it a market value of 6.6 billion pounds. MGM shares fell 5.3% in 2020.

Source:

Ladbrokes Owner Entain Rejects MGM’s $11 Billion Takeover”, bloomberg.com, January 4th, 2020.

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