The American casino company wants its online business to grow
A £ 8 billion takeover bid from its U.S. joint venture partner MGM Resorts International substantially undervalues the firm, the owner of betting brands Ladbrokes and Coral has said.
In a statement to the stock exchange on Monday morning, Entain said the bid from MGM, owner of the Bellagio casino in Las Vegas, undervalued the British group and called into question the reason for a merger.
The bid represented a value of 1,383 pence per share of Entain, a 22 percent premium on New Year’s Eve, the last trading day before the offer was first announced, to the 1,133.5 pence price.
At around £ 8.1 billion, it values the British firm.
MGM is also prepared to make a partial cash bid, Entain said. The owners of Entain would own 41.5 percent of the expanded company.
At the market open, Entain shares jumped 27 percent to 1,442 pence, making it the highest increase on the FTSE 100.
The company, known as GVC Holdings until last month after shareholders voted to change its name, launched the 50/50 joint venture BetMGM with the U.S. group in 2018 in the increasing number of U.S. states where it is legal to offer online sports betting and casino games.
The push to deliver online gambling in 2018 came after the U.S. A significant barrier to sports betting, which was previously barred in all states except Nevada, was lifted by the Supreme Court.
State by state, sports betting is still limited, but experts say that more states are likely to legalize it soon.
In eight states, BetMGM is already open, while GVC had less footing in the United States than other British bookmakers such as William Hill and Flutter.
A £ 2.9 billion purchase of William Hill was agreed to by MGM competitor and U.S. casino operator Caesars Entertainment in September.
Entain said, “Entain has informed MGMRI that it believes the proposal significantly undervalues the company and its prospects. The board has also asked MGMRI to provide additional information regarding the strategic rationale for combining the two companies.”
Under U.K. takeover law, MGM has until Feb. 1 to either announce its firm intention to make an offer or withdraw.
MGMRI has been asked for comment.