The US casino company MGM Resorts decided not to pursue an acquisition of Entain. After the UK gambling giant rejected its initial £8.1-billion takeover bid earlier in January, with the Ladbrokes and Coral owner saying that the offer underestimated its value, MGM Resorts made a decision not to push further.
The Las Vegas casino company had until February 1st to make a firm takeover offer under the UK legislation after media hubs reported it had made a proposal to acquire Entain. Together, the two companies already run a US-based joint venture called BetMGM.
Now, the US casino operator revealed that, after careful consideration and assessment, it had decided not to proceed with another takeover offer for Entain. It cited the limited recent engagement between the two companies as one of the aspects that have been taken into account when making the decision.
Under the current rules on takeover deals in the UK, MGM Resorts would be able to make a new offer after six months.
According to some estimates, the price of Entain shares suggested that MGM Resorts could increase its previous offer to acquire the UK gambling company. However, the end of the negotiations caused a 15% drop in Entain share price on January 19th afternoon, dragging its overall stock market value down to £7 billion.
Entain Believes in Prosperous Future and Strong BetMGM Momentum in the US
As Casino Guardian has already reported, Entain had rejected the proposed acquisition deal, which was worth £8.1 billion, saying that the takeover offer greatly undervalued its business. At the time, it also cited some financial analysts’ estimates, according to which Entain’s operations were worth approximately £10 billion.
The Chief Executive Officer of MGM Resorts, Bill Hornbuckle, explained that the US sports betting and online gambling business that the company runs in collaboration with Entain remains a key priority for the operator. Mr Hornbuckle also noted that MGM Resorts intends to continue its digital expansion through its pre-eminent physical gaming, entertainment and hospitality platform.
The US casino giant’s boss shared that his company remains committed to its partnership with Entain as far as the BetMGM joint venture is concerned, registering a strong momentum. Mr. Hornbuckle said MGM Resorts is hopeful that the joint venture with its UK gambling partner would become operational in 20 US states by the end of 2021.
Entain, on the other hand, is convinced that it would manage to keep its growth and sustainability thanks to an excellent strategy and leading technology in order to be able to deliver significant value for its stakeholders. As Casino Guardian reported, the company’s investors have strongly backed the gambling operator’s decision to reject the takeover offer, saying that its international assets, along with its growing exposure to the US betting market via BetMGM, are an excellent ground for continued growth.
According to sources close to Entain’s talks with its shareholders, who were cited by The Guardian the company’s investors would have accepted a much larger acquisition bid to agree to a takeover deal. The unexpected departure of Entain’s boss Shay Segev at the time of the two companies’ negotiations had also raised some questions regarding the deal’s fate. One person close to the talks said that Mr Segev’s departure ruined everything.
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Olivia Cole
