- US-based MGM has pulled back from a possible £8.1bn offer for Entain
- Entain had argued that the offer “significantly undervalue[d]” it
MGM Resorts International has dropped its plans to buy Entain (ENT) after the gambling group formerly known as GVC rejected its 1,383p-a-share bid.
Entain’s one-time suitor said on Tuesday that it “does not intend to submit a revised proposal and it will not make a firm offer for Entain”. MGM added that it is “committed to being a premier global omni-channel gaming and entertainment company”. It will “maintain a disciplined framework while evaluating a range of compelling strategic opportunities”.
MGM made an £8.1bn all-share swoop on Entain, which owns the Ladbrokes and Coral brands, earlier in January, saying that it believed “both its proposal and the strategic rationale for the combination are compelling”. But Entain said at the time that the price “significantly undervalue[d]” it, stating in the same breath that it had asked MGM to provide more detail on the motivation for the deal.
Under the terms of MGM’s takeover plan, each Entain shareholder would have received 0.6 shares in MGM for every Entain share owned, although MGM had also suggested that a limited partial cash alternative would also be an option.
In response to MGM’s decision not to proceed with a bid, Entain said it has “a clear growth and sustainability strategy, backed by leading technology, that it is confident will deliver significant value for stakeholders”. It added that it “look[s] forward to continuing to work closely with [MGM] to drive further success in the US” through their joint venture, online-focused sportsbook BetMGM.
MGM’s approach isn’t the only story to have garnered investors’ attention in recent weeks. Entain announced on 11 January that boss Shay Segev was leaving to become co-head of sports streaming platform DAZN, having only stepped into the chief executive role last July.
Shares in Entain fell more than a tenth on the news that MGM had walked away, having surged on 4 January when the potential transaction came to light. They are up by roughly a third over the past 12 months.
Still, analysts at RBC Capital Markets “continue to like Entain’s ambition to build a global business of scale”, pointing in part to the group’s proprietary tech platform. And prior to MGM’s revelation that it was stepping away, broker Berenberg said Entain remained its “top pick for the US opportunity” even if it did not merge with MGM – arguing that it looked “hugely undervalued”. Hold at 1,239p.
