The British gaming company’s shares fell by 18 per cent after MGM said it would not come back with a higher offer.
UK.- Shares in the FTSE 100 gambling company Entain plunged by 18 per cent after MGM announced that it would not be increasing its takeover offer.
Entain’s market cap dropped by more than £1bn after MGM Resorts dropped its takeover interest. The UK operator’s share price fell to £1.185p per share, reducing its market cap from around £8bn to £7bn.
MGM Resorts International announced that it would not make a firm offer to acquire Entain, with which it has a joint venture in the US.
Its initial takeover proposal earlier this month for an all-stock deal valuing Entain at £8.08bn was rejected as for “significantly undervaluing” the business.
It had until February 1 to make a new bid, but has announced it will desist despite support from majority shareholder IAC, which pledged to increase its stake to provide funds for a higher bid.
Both operators said the failed takeover would not affect their continued partnership in the US market, BetMGM, which began in 2018.
Bill Hornbuckle, MGM Resorts International chief executive, said: “BetMGM, our US sports betting and online gaming venture with Entain, remains a key priority for the company as we continue to leverage our preeminent physical gaming, entertainment and hospitality platform to expand digitally.
“We believe that BetMGM has established itself as a top-three leader in its markets and we remain committed to working with Entain to ensure its strong momentum continues as it expects to be operational in 20 states by the end of 2021.”
Entain said: “We look forward to continuing to work closely with [MGM Resorts] to drive further success in the US through the BetMGM joint venture.”
Citing rule 2.8 of the City Code on Takeovers and Mergers, MGM Resorts said it would now only make a new proposal or firm offer with the agreement of Entain’s board, if another business made a bid to buy the operator or if a reverse takeover bid emerged.
Entain, meanwhile, has found itself looking for a new CEO following the resignation of Shay Segev after just six months in the role.
Nygaard-Andersen, the former chief executive of Swedish media conglomerate Modern Times Group for the EMEA region, is reported to be the favourite to replace Segev.