Shares in Ladbrokes owner Entain soar after £8.1 billion US casino takeover bid

Shares in the parent company of Ladbrokes and Coral soared on Monday after reports it had received a takeover proposal from US casino giant MGM Resorts International were confirmed.

However Entain, until recently known as GVC Holdings, said the £8.1 billion offer from its partner in the US market undervalued the company.

Entain's share price surged following the news and finished up more than 25 per cent at 1,420p at close on Monday.

The announcement followed a report in the Wall Street Journal that MGM had upped its offer having recently had a $10bn (£7.3bn) bid turned down by Entain.

Under the terms of its most recent proposal, MGM would offer 0.6 shares for each Entain share representing a value of 1,383p and a premium of 22 per cent based on closing prices on December 31. As a result Entain shareholders would own 41.5 per cent of the enlarged group.

Entain said in a statement that it "believes that the proposal significantly undervalues the company and its prospects", adding: "The board has also asked MGMRI to provide additional information in respect of the strategic rationale for a combination of the two companies."

They added: "Shareholders are encouraged to take no action. There can be no certainty that any offer will be made for the company, nor as to the terms on which any such offer might be made."

MGM has until 5pm on February 1 to make a firm offer or withdraw its interest.

Coral: parent company Entain has received takeover offer from MGM ResortsCredit: Matt Alexander / PA Media

Entain and MGM launched a joint venture called BetMGM in 2018 to exploit the burgeoning market in the United States which has been expanding rapidly after a Supreme Court decision to strike down legislation which had previously limited sports betting to a handful of states.

MGM's offer is the latest example of potential consolidation centred on the American market. Last year William Hill shareholders approved their company's £2.9 billion takeover by US casino giant Caesars Entertainment.

Caesars has made it clear it is only interested in William Hill's American arm and would look to find new owners for other parts of the business. There was no indication what MGM wishes to do with Entain's businesses in markets such as the UK.

'Ability to improve offer will be key'

David Brohan, gaming and leisure analyst with stockbrokers Goodbody, said the move by MGM for Entain would come as no surprise.

He added: "The two groups have an existing JV [joint venture] which has potential to be a leading player in US sports betting and iGaming, and a JV structure is never likely to last indefinitely.

"In addition, the sports betting and iGaming opportunity is something that large US gaming groups want to control and own fully themselves – and Caesars' move for William Hill last year is an obvious example of this."

Analysts at fellow stockbrokers Davy said the proposal was the latest example of industry consolidation inspired by the opportunity in the US.

They added: "We believe the proposal undervalues the sum of the group's operations, including its prospects in the US. MGM's flexibility and ability to improve its offer will therefore be key."

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