More than $1.4bn wiped off Entain’s value as MGM hits brakes on takeover bid

Entain’s market cap fell dramatically by more than £1bn ($1.4bn) after MGM Resorts dropped its takeover interest in the FTSE 100 firm.

Entain’s share price plunged 18% on the London Stock Exchange to £1,185p per share, reducing the operator’s market cap from around £8bn ($10.9bn) to £7bn ($9.5bn), although the price has recovered slightly to 1,206p at the time of writing.

MGM, which was widely expected to return with an improved takeover offer after its initial £8.09bn bid was rebuffed, said that after careful consideration, it would no longer pursue a potential acquisition.

“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,” said MGM in a statement.

Entain’s board of directors rejected the initial bid after concluding it “significantly undervalued” the business and its future prospects.

The rejection was followed by the surprise announcement of the departure of CEO Shay Segev, just six months into his tenure.

Segev’s exit, although unrelated to MGM’s bid, saw the Entain board issue a statement reaffirming its position against the proposed move.

MGM has said it remains committed to operating the BetMGM US joint venture with Entain.

“BetMGM, our US sports betting and online gaming venture with Entain, remains a key priority for the company as we continue to leverage our preeminent physical gaming, entertainment and hospitality platform to expand digitally,” MGM Resorts International CEO 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,” he added.

These sentiments were echoed by Entain, which reaffirmed its allegiance to the JV despite the aborted takeover bid.