Ladbrokes owner shares hit record high as investors bet on new MGM bid
Reuters
Published Aug 04, 2021 10:20AM ET
Updated Aug 04, 2021 12:00PM ET
By Chris Peters and Yadarisa Shabong
(Reuters) -Shares of Entain, which rejected a takeover offer from MGM Resorts (NYSE:MGM) this year, jumped to a record high on Wednesday after a $4.4 billion asset sale by the U.S. casino group prompted bets of a renewed bid for the British bookmaker.
Entain, which owns the Ladbrokes (LON:LCL) and Coral brands, knocked back a $11 billion offer from MGM in January as too low. But some investors expect that MGM's sale of its stake in MGM Growth Properties (NYSE:MGP) will give it fresh cash that could spur MGM to make another bid for Entain, analysts said.
"Investors have been debating the likelihood of MGM returning with an improved bid for ENT since its first unsuccessful bid," Davy analyst Michael Mitchell said via email.
"The market believes (MGM's) strengthened balance sheet, following today's news, has increased the possibility of the same."
MGM said in its announcement on Wednesday that the stake sale would give it "$11.6 billion of domestic operations liquidity available to enable execution of its goals of becoming the premier gaming entertainment company".
American gambling firms had been tapping into the expertise of British rivals in the past year as sports betting has taken off in the United States during the coronavirus crisis and following a landmark ruling in 2018, which legalised such bets.
William Hill was taken over by Caesars (NASDAQ:CZR) Entertainment while Gamesys agreed in March to a possible takeover by Bally's Corp.
When it dropped plans to bid for Entain in January, MGM said it would not submit a revised offer. Under UK takeover rules, the U.S. firm was precluded from bidding for Entain for six months after walking away. The six-month window expired on July 19.
Entain, previously known as GVC, and MGM declined to comment.
The companies continue to collaborate on their 50/50 BetMGM joint venture in the United States.
Entain's shares rose 8% to an all-time peak and were the top gainer on the FTSE 100 index, while other British gambling companies Flutter and 888 Holdings also rose between 3% and 5% after MGM's announcement.
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Written By: Reuters
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