In response to press speculation, Entain’s Board reported that it had received proposals from its US partner MGM Resorts International (MGMRI) about a potential offer to the company, but that it had rapidly poured cold water on any short-term agreement.
Reports appeared yesterday in the Wall Street Journal that after having refused a US$10bn (£7.3bn) cash bid, MGM had made a new approach for Entain and Entain told the stock market about the current cash & shares approach of the casino operator this morning.
Entain said in a statement: “Under the terms of its most recent proposal, MGMRI would offer 0.6 MGMRI shares for each Entain share. Based on closing prices on 31 December 2020, being the last trading day prior to this announcement, MGMRI’s proposal represents a value of 1,383 pence per Entain share and a premium of 22% to Entain’s share price.
“Under the terms of the proposal, Entain shareholders would own approximately 41.5% of the enlarged MGMRI. MGMRI has indicated that a limited partial cash alternative would also be made available to Entain shareholders.”
The 22 percent premium would be worth almost £ 8.1 billion to Entain, but the Board of Directors of the company was unmoved by this second strategy and called for more clarity on the reasoning of MGM.
It said: “Entain has informed MGMRI that it believes that the proposal significantly undervalues the Company and its prospects. The Board has also asked MGMRI to provide additional information in respect of the strategic rationale for a combination of the two companies.”
As of now, Entain has advised its shareholders to take no action and added that there can be no guarantee that any bid would be made for the company or as to the conditions under which any such offer may be made.
Entain operates several global gaming brands, including Ladbrokes, Coral, Bwin, PartyPoker, SportingBet, Gala Bingo, Eurobet and Betboo, but is also a partner with MGM in the booming US sports betting and gaming industry, where the leading brands DraftKings and FanDuel are already challenged by their joint venture BetMGM. Over the past 12 months, US stock market investors have become massively involved in the sports betting business, placing pressure on MGM Resorts to strengthen its hand in the market in response to deals such as the acquisition of William Hill by Caesars Entertainment.