* MGM deal values Entain at $11 billion
* Proposal 'significantly undervalues' firm - Entain
* Entain shares jump 28% to a record high
(Adds details on proposal, background)
By Tanishaa Nadkar
Jan 4 (Reuters) - Ladbrokes owner Entain said on
Monday that an $11 billion takeover approach from U.S. casino
operator MGM Resorts significantly undervalued its
business, as companies move to capitalise on an expected boom in
U.S. sports betting.
The United States is widely viewed as the next big growth
market following a 2018 Supreme Court ruling that lifted a ban
on sports betting. U.S. companies have sought partnerships to
tap European expertise, including Caesars Entertainment's
2.9 billion pound deal for Britain's William Hill.
MGM and Britain's Entain, formerly known as GVC, have had a
joint venture since 2018, when they set up an online betting
platform in the United States after the court ruling.
MGM's proposed offer of 1,383 pence per Entain share implies
a total deal value of 8.09 billion pounds ($11.08 billion),
according to a Reuters calculation, representing a premium of
22% to Entain's last close.
Shares in Entain jumped as much as 28% to an all-time high
of 1,455 pence on Monday, leading gainers on the UK blue-chip
index in early trade.
Entain said it received multiple proposals from MGM, with
the latest one being MGM's offer of 0.6 of its shares for each
Entain share. Under the proposal, Entain shareholders will own
about 41.5% of the enlarged MGM.
"Entain has informed MGMRI that it believes that the
proposal significantly undervalues the Company and its
prospects," it said on Monday.
Davy Research analysts also said the proposal undervalued
the group's operations, including its prospects in the United
States.
"MGM's flexibility and ability to improve its offer will
therefore be key," they added.
Entain has itself expanded rapidly through a series of
acquisitions and owns the bwin, Coral and Eurobet brands. It has
asked MGM for more information on the strategic rationale for a
combination.
Las Vegas-based MGM has indicated that a limited partial
cash alternative would also be made available to Entain
shareholders, the company said.
MGM did not immediately respond to a Reuters request for
comment.
The proposal had been reported by the Wall Street Journal on
Sunday.
($1 = 0.7301 pounds)
(Reporting by Tanishaa Nadkar in Bengaluru; Editing by
Ramakrishnan M. and Pravin Char)
