The owner of the Ladbrokes and Coral betting brands has said an £8bn takeover bid from its US joint-venture partner, MGM Resorts International, significantly undervalues the business.
Entain said the offer by MGM, the owner of the Bellagio casino in Las Vegas, undervalued the British group, and questioned the rationale for a merger, in a statement to the stock market on Monday morning.
The offer equated to a value of 1,383p per Entain share, a 22% premium to the 1,133.5p price on New Year’s Eve, the last trading day before the bid was first reported. It values the UK company at about £8.1bn. MGM was also willing to make a partial cash offer, Entain said. Entain shareholders would own 41.5% of the enlarged group.
Entain shares jumped 27% to 1,442p when the market opened, making it the biggest riser on the FTSE 100.
The company, known as GVC Holdings until last month after shareholders voted for a name change, started the 50/50 joint-venture, BetMGM, with the US group in 2018, offering online sports betting and casino games in the growing number of US states where it is legal.
The 2018 push to launch online gambling came after the US supreme court removed a large obstacle to sports betting, which had previously been banned in every state barring Nevada.
Sports betting is still regulated on a state-by-state basis, but analysts believe that more states are likely to legalise it soon. BetMGM is already available in eight states, although GVC had less of a foothold in the US than other British bookmakers such as William Hill and Flutter. In September, MGM rival and US casino operator Caesars Entertainment agreed a £2.9bn takeover of William Hill.
Entain 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.”
Under UK takeover law MGM has until 1 February to either announce its firm intention to make an offer or to withdraw. MGMRI was approached for comment.