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Ladbrokes owner rejects bid from MGM Resorts

Ladbrokes in sights of bidder

Ladbrokes, the gambling chain, has confirmed that it has received a possible offer of £8.1 billion bid from US casino giant MGM Resorts.

UK-based Entain, the owner of bookmakers Ladbrokes and Coral, as well as a number of online-only sports betting and gambling sites, has confirmed this morning that it has received proposals from MGM Resorts International, its partner in the US market.

The offer is 1,383p per Entain share and represents a premium of 22% to Entain’s share price on 31 December. Entain said it significantly undervalues the business, though it was top riser on the FTSE 100, its shares surging 25.28% to 1420p at the close.

It is understood that MGM’s interest is focused on Entain’s online gambling business.

Entain recently dismissed a $10bn (£7.3bn) all-cash offer from MGM.

Along with Ladrokes, FTSE 100-listed Entain also owns sports-betting site Bwin, gaming group Partypoker, Eurobet, Gala and Foxy Bingo.

Last month, Entain renamed itself from GVC Holdings.

The new bid interest comes with financial backing from MGM’s largest shareholder, InterActiveCorp (IAC), which took a 12% stake in MGM Resorts last August.

At the time, IAC’s chief executive Barry Diller said IAC planned to work with MGM to expand its online gambling portfolio.

The possible acquisition comes as the casino industry faces huge pressures from the Covid-19 pandemic which has forced the closure of bricks-and-mortar casino operators.

The economy of Asian casino hub Macau shrank 49% in the first quarter of this year, while unemployment in Las Vegas reached 30% earlier in the year and remains well above the US average.

Reaction

AJ Bell investment director Russ Mould, says: “A matter of weeks after dusting off a shiny new name and strategy and Entain (formerly GVC Holdings) could be coming to an end to its journey on the stock market with MGM Resorts making a multi-billion dollar offer.

“This follows the recent approval of a takeover of William Hill by Caesars Entertainment and the similarities are striking. Both involve US partners who each company would have seen as their route to substantial growth across the Atlantic.

“While Entain has rebuffed the offer as undervaluing the company and questioned the case for a tie-up, like William Hill its bargaining position is somewhat compromised by the fact it is negotiating with a partner.

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“Shareholders may be persuaded to hold firm by the fact the offer includes only a limited cash element.

“The US was seen as a great opportunity for UK firms after a big obstacle to sports betting was removed by a court ruling in 2018.

“However, the ultimate result could be that UK gambling firms are swallowed up by US firms like MGM and Caesars which are desperate to add to their online footprint at a time when the pandemic is undermining business in their resorts and casinos.”



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