British sports betting and gambling firm Entain plc (LON:ENT) has seen its shares freefall after casino operators MGM Resorts International announced it does not intend to submit a revised proposal for the firm, which snubbed an $11 billion takeover deal earlier this month.
Entain, previously known as GVC Holdings – which owns Ladbrokes and Sportingbet – rejected MGM’s takeover proposal in early January on the basis that it severely undervalued the company.
MGM said it did not plan to increase its approach, and would not be making a firm offer on Entain “after careful consideration and having reflected on the limited recent engagement between the respective companies regarding MGM’s rejected all-stock proposal”.
Shares at the betting firm plummeted 14.36%% to 1,210.50p as of GMT 15:15, undoing almost all the gains made in the past month since the takeover approach was announced to the public.
The Telegraph reported on the weekend that Aberdeen Standard – Entain’s third-biggest investor – said that MGM was undervaluing the company by billions of pounds amid a US online gambling bonanza.
Wes McCoy, Aberdeen Standard investment director, said: “If you’re going to buy this company from my fundholders, then the conversation is going to have to start with: ‘This is a great company, now let’s talk’. This offer is not in the right zip code, or postcode”.
Despite MGM’s abrupt decision, Entain released a statement citing its intentions to continue working alongside the casino giant across the pond:
“We look forward to continuing to work closely with MGM to drive further success in the United States through the BetMGM joint venture”.
The news comes just a week after Entain’s CEO, Shay Segev, announced he is to step down after just 7 months in the role. He still has to complete his 6 month notice period unless a successor is appointed.
“We are sorry that Shay has decided to leave us but recognize that we cannot match the rewards that he has been promised,” Barry Gibson, chairman of Entain, said in a statement.
