* MGM deal values Entain at $11 billion
* Proposal 'significantly undervalues' firm - Entain
* Entain shares jump 28% to a record high
(Adds analyst comments, details, 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.
MGM's proposed offer of 1,383 pence per Entain share implies
a deal value of 8.09 billion pounds ($11.08 billion), according
to Reuters calculations, representing a 22% premium to Entain's
last close.
Entain shares jumped as much as 28% to an all-time high of
1,455 pence, leading gainers on the UK blue-chip index.
A deal would raise questions over the future of UK high
street betting shops after Caesars said it could sell off
William Hill's non-U.S. operations. However, an Entain spokesman
told Reuters there was no detail on that yet.
"Entain is a far more global and more integrated operation –
operating online gaming sites around the world as well as a high
street estate. That makes folding the non-US operations into MGM
or spinning them off separately a far greater challenge,"
Hargreaves Lansdown analyst Nicholas Hyett said.
U.S. PROSPECTS
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.
MGM's proposal is backed by billionaire mogul Barry Diller's
IAC group, according to the Wall Street Journal, which
first reported the proposal on Sunday. It follows
an earlier all-cash proposal worth about $10 billion that was
also rejected, it said.
Davy Research analysts also said the proposal undervalued
Entain's operations, including its prospects in the United
States, adding that MGM's flexibility and ability to improve its
offer will be key.
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.
"It would be no surprise if the predator were to put a
bigger wad down on the table," AJ Bell investment director Russ
Mould said.
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 respond to a Reuters request for comment outside
usual working hours.
($1 = 0.7301 pounds)
(Reporting by Tanishaa Nadkar in Bengaluru; Editing by
Ramakrishnan M., Pravin Char and Emelia Sithole-Matarise)
