The US land based casino giant MGM Resorts International has had a staggering £8bn bid for the owners of British High Street bookmakers Ladbrokes Coral rejected, in their latest attempt to gain a ready made footing in the lucrative online gambling market.
MGM Resorts International who own and operate iconic Las Vegas properties such as the Bellagio ( which featured in the George Clooney film Ocean’s Eleven ), are keen to join their rivals Caesars Entertainment Inc who are in the process of acquiring William Hill for nearly £3bn, in getting access to the assets of a high profile established British gambling operation.
The rejection of MGM Resorts £8bn bid has seen the shares in Ladbrokes Coral owner Entain plc jump this morning by more than 25% in value, with shares trading at the time of writing at £14.59. The price per share on offer from MGM Resorts International for Entain plc shares worked out at £13.83.
The Board of Directors at Entain plc confirmed the offer from their US partners this morning, but stated that they believed that the proposal significantly undervalued the company and its prospects. If it had been accepted, it would have seen existing Entain shareholders own 41% of the enlarged MGM Group.
What is clear, is that US companies who work alongside established British owned operators are keen not to share the spoils with their transatlantic partners, hence the recent offer for William Hill from Caesars Entertainment, now being mirrored by MGM Resorts for Entain plc.
Entain plc who recently changed their name from GVC Holdings plc, operate several heavyweight online brands, in addition to having a significant presence on the UK high street with their Ladbrokes and Coral betting shops. Brands which they own include the likes of Party Poker, bwin, SportingBet, Gala Bingo and BetMGM who they co-own with MGM Resorts International.
BetMGM being the 50/50 joint venture between Entain and MGM Resorts International which was established back in 2018, to take advantage of the regulated gaming markets in the US states of New Jersey, West Virginia, Nevada, Indiana, Michigan, Mississippi and Colorado.
With the release of a statement addressing and confirming the bid received, Entain said the following: “The Board of Entain plc (“Entain” or the “Company”) notes the recent press speculation. The Board of Entain confirms that it has received proposals from MGM Resorts International (“MGMRI”), its partner in the US market, concerning a possible offer for Entain.”
“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.”
“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.
A further announcement will be made as appropriate. In the meantime, Entain shareholders are encouraged to take no action.”