What a start to the year for this newly renamed company. Shares in the Entain Group have skyrocketed following the company’s decision to spurn a potential acquisition deal.
Entain, which owns a number of UK-facing online gambling brands including Foxy Bingo, Gala Bingo, Bwin, Coral, Ladbrokes and Sportingbet, has turned down an offer of $11bn saying that the proposed deal “significantly undervalues” its business.
The company that is hoping to buy out Entain (the latter of which was previously known as GVC Holdings) is none other than the world-famous, American global hospitality and entertainment company, MGM Resorts.
MGM Resorts already owns an impressive portfolio of hotel resorts and casinos across the US, Macau, China, and Japan, including the Bellagio, MGM Grand, The Mirage, Mandalay Bay, and the Aria.
Reports say that while Entain has rejected MGM’s initial offer, it has asked for “additional information in respect of the strategic rationale for a combination of the two companies”. This means that the buyout is not totally dead in the water.
Unimpressed by the offer
Entain’s Board of Directors appear to be unimpressed by MGM Resorts’ $11bn (£8.1bn) valuation, and as it is currently uncertain whether the rejection will lead to an improved offer, it has advised its stakeholders not to take any action.
Following, shares in Entain rose by more than 26% in London while MGM Resorts International’s shares in New York increased by a more modest 1.03%.
However, the appearance of an acquisition offer does not indicate that the two companies have not encountered each other previously. In fact, in July 2018, MGM and GVC Holdings (as it was then known) entered into a joint venture under the name BetMGM with a view to creating an online gaming and sports betting platform targeting the US market.
According to The City Code of Takeovers and Mergers (which is a binding set of rules that apply to UK-listed companies) MGM Resorts has until 5 PM on 1st February 2021 to announce a firm intention to make an offer for Entain.