Ladbrokes owner's stock plunges as MGM drops bid

Saleha Riaz
·3 min read
Earlier this month, Entain had turned down an $11bn (£8.1bn) takeover offer from  MGM, its partner in the American betting market. Photo: Getty Images
Earlier this month, Entain turned down an $11bn takeover offer from MGM, its partner in the American betting market. Photo: Getty Images

Ladbrokes owner Entain (ENT.L) saw its shares fall roughly 15% as US casino giant MGM Resorts (MGM) confirmed Tuesday it was no longer interested in acquiring the company. Entain ended the day 11.9% lower.

Meanwhile, MGM’s stock in the US ticked up around 3%.

Entain's stock took a major hit Tuesday afternoon. Chart: Yahoo Finance
Entain's stock took a major hit Tuesday afternoon. Chart: Yahoo Finance

Earlier this month, Entain had turned down an $11bn (£8.1bn) takeover offer from MGM, its partner in the American betting market.

The FTSE 100 (^FTSE) gambling firm, formerly known as GVC Holdings, had said at the time the proposal “significantly undervalues the company and its prospects.”

Not long after, Entain boss Shay Segev quit after less than six months in the role.

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, noted that “Entain was clearly playing hard to get... Entain shareholders are now nursing the pain of rejection, which comes hot on the heels of the surprise departure of chief executive Shay Segev.”

“The US still holds potential for the company which has already gained a major foothold via its advanced online platforms in the sports betting arena, a market which is already worth many billions of dollars a year,” she added.

Meanwhile, in a statement, MGM said that “after careful consideration and having reflected on the limited recent engagement between the respective companies regarding MGM's rejected all stock proposal at an exchange ratio of 0.6x, it does not intend to submit a revised proposal and it will not make a firm offer for Entain.”

It added it is “committed to being a premier global omni-channel gaming and entertainment company, and will maintain a disciplined framework while evaluating a range of compelling strategic opportunities”.

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Entain responded by saying it “has a clear growth and sustainability strategy, backed by leading technology, that it is confident will deliver significant value for stakeholders.”

It said it looks forward to continue to work closely with MGM to drive further success in the US through the BetMGM joint venture.

BetMGM is a partnership between MGM and Entain that “is revolutionizing sports betting and online gaming in the United States,” according to its website.

Earlier, Segev had said: “Entain is in great shape after the successful launch of our new strategy. I also want to emphasise that the recent interest from MGM Resorts has had absolutely no bearing on my decision, and I fully support the board’s decision to reject their proposal.”

The British gambling sector has received a lot of attention from overseas rivals in the last few years. American companies in particular have targeted bookmakers such as William Hill (WMH.L) and Ladbrokes, as the country seeks to expand its sports betting and online gambling presence.

The US has been earmarked as the next big growth market for sports betting, as laws that left the sector stagnant since after the financial crisis have finally started to lift.

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