Entain, the UK gambling group behind Ladbrokes Coral, has rejected a £ 8bn takeover bid from US casino operator MGM Resorts, arguing that it “significantly undervalues” the company.
In a statement on Monday, the FTSE 100 company, which also owns sports betting website Bwin and online gaming group Partypoker, added that it had requested more information from MGM “regarding the strategic reason for a combination of the two. companies”.
The approach by MGM, owner of the Las Vegas Bellagio casino, comes as U.S. operators fight for a share of America’s fast-growing online gambling and sports betting market, which began after a 2018 Supreme Court ruling eased regulations .
Under the takeover proposal, investors in the UK group would receive 0.6 MGM shares, valuing their Entain shares at 1,383p – a 22 per cent premium on the closing price on New Year’s Eve. Shares in Entain, formerly known as GVC, rose more than 25 percent in early trading on Monday.
The UK group said MGM had indicated that a ‘limited partial cash alternative’ would also be made available to Entain shareholders.
The US has become a promised land for betting companies looking to reduce their exposure to increasingly stringent regulations in mature markets. At the same time, traditional land-based casino operators in the US, whose model had already fallen before the pandemic, sought expertise from European operators to promote their business online.
MGM and Entain have been partners in a $ 200 million joint venture since 2018 to pursue sports betting opportunities in the US. The pair increased their investment in the platform, called Roar Digital, to $ 450 million last year.
The speculation that MGM could take over Entain has grown after rival casino operator Caesars Entertainment’s £ 2.9 billion acquisition of its own sports betting partner, British bookmaker William Hill.
Entain, who was recently reappointed after the appointment of a new CEO, said he believes he can take a leading position in the US sports betting market, which she estimates would reach $ 20 billion by 2025. could revenue – at about $ 1.4 billion this year.
Greg Johnson, an analyst at Shore Capital, said that MGM’s proposal appreciates Entain’s core business and the scope of the event in the United States, and that he’s also struggling to see the reason for the largely online Entain merger with MGM, which operates mainly bricks. and mortar sites.
Analysts at investment bank Davy have estimated the total value of Entain’s business, including its stake in the US joint venture, at £ 13.2 billion, even on a conservative US basis for US liability.
The MGM proposal is backed by billionaire tycoon Barry Diller’s IAC group and follows on from an earlier money proposal worth about $ 10 billion that was also rejected by the people over the matter.
Mr Diller’s IAC, which invested $ 1 billion in MGM last year to promote the casino operator’s online business, supports the offer for Entain and is prepared to submit an additional $ 1 billion to finance the takeover. , say those who have knowledge of the proposals.
David Satz, a former CEO at Caesar, with extensive expertise in the U.S. gaming regulatory environment, was recently added to the board of directors of Entain to help the British group assess its prospects in the US.
Mr. Diller, who launched the Fox television network for Rupert Murdoch before building his own broadcast and digital media empire, said in August that IAC’s experience could contribute to the growth of MGM’s online gaming industry.
IAC owns numerous online and digital media brands, including the news site The Daily Beast, the video streaming site Vimeo, and the home improvement site Angie’s List.
Neither MGM nor IAC could be reached immediately for comment Monday.
Under the UK takeover rules, MGM can make a fixed offer until 1 February.
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