Entain tanks as MGM Resorts walks away

MGM said in a brief statement that "after careful consideration and having reflected on the limited recent engagement between the respective companies regarding MGM's rejected all stock proposal at an exchange ratio of 0.6x, it does not intend to submit a revised proposal and it will not make a firm offer for Entain".

"MGM is committed to being a premier global omni-channel gaming and entertainment company, and will maintain a disciplined framework while evaluating a range of compelling strategic opportunities," it said, adding that BetMGM, its US sports betting and online gaming venture with Entain, remains a key priority for the company.

Chief executive officer Bill Hornbuckle said: "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."

Responding to MGM's announcement, Entain said it has "a clear growth and sustainability strategy backed by leading technology" and that it is confident it will deliver significant value for stakeholders.

Entain - formerly GVC - announced earlier this month that it had rejected a proposed offer from its US partner valuing the company at about £8.1bn. MGM had proposed paying 0.6 MGM share for each Entain share.

But the bid was rejected on the basis that it "significantly undervalues" the company. Entain, which also owns sports betting site Bwin and online gaming brand Partypoker, asked for more information about the strategic rationale for combining with the US hotel and casino operator.

Entain shares ended the session down 11.9% at 1,245p.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "The courting of Entain by MGM didn’t come as much surprise given Caesars' purchase of William Hill. Entain and MGM had already been working together to take advantage of the recent legalisation of the sports betting in the US. Wanting to take overall control of the relationship was understandable, but clearly MGM’s board baulked at upping the all-share offer, however important strategically it may be.

"The deal would have been more complex than the bid for William Hill, which can be much more easily split into a large UK business and a small but growing US operation. Entain is already a bigger and more global entity with online gaming sites around the world and a large network of high street betting shops.

"Entain shareholders are now nursing the pain of rejection, which comes hot on the heels of the surprise departure of chief executive Shay Segev for the sports platform DAZN. The company though says it has a clear growth strategy, and will continue in its joint venture with MGM. The US still holds great potential for the company which has already gained a major foothold via its advanced online platforms in the sports betting arena, a market which is already worth many billions of dollars a year."