Ladbrokes owner turns down MGM’s $11bn offer

Gambling company Entain Plc has dismissed an £8.1 billion ($11.1 billion) takeover attempt from MGM Resorts International, saying that the bid undervalues the operator that’s benefiting from a boom in online betting.

The latest offer, which would give the Las Vegas casino operator broader access to fast-growing online betting markets, was made public by London-listed Entain in a statement yesterday, and topped an earlier all-cash bid made late last year, people familiar with the matter said.

Entain is behind an array of online gambling sites, including Ladbrokes Coral and Bwin, which have become increasingly attractive after the US legalised sports betting in 2018.

Las Vegas-based casino giant Caesars Entertainment Inc is taking over the UK’s William Hill Plc, while Flutter Entertainment Plc, headquartered in Dublin, is upping its stake in US bookmaker FanDuel and last year completed a deal for the Stars Group Inc.

Under the proposed terms, Entain investors would receive 0.6 of a share of MGM for every share they hold. At 1,383 pence per share, the bid is a 22% premium to Entain’s closing share price on Thursday.

MGM may also offer a “limited partial cash alternative” to the British company’s shareholders, who would own about 42% of the combined business.

A representative for MGM didn’t immediately respond to a request for comment outside of regular business hours.

“We think that the market has not yet recognised the upside potential and momentum in Entain’s joint venture,” Jefferies analyst James Wheatcroft said in a note to clients.

If the market valued the British company at the same level as its US peer, DraftKings Inc, Entain could expect a valuation of about 1,975 pence per share, he said.

MGM, the largest casino operator on the Las Vegas Strip, formed a joint venture in 2018 with Entain, formerly known as GVC Holdings Plc, to capitalise on the growth of online betting in the US. The partnership got off to a slow start as the venture had some disagreements over strategy.

Entain said it has asked MGM for more details on the strategic rationale on the combination and has asked shareholders to take no action.