MGM Resorts International says it is withdrawing its initial proposal to take over British gambling brand, Ladbrokes after the company rejected its $11 billion bid. The US Casino chain announced on Tuesday that since there has been reluctance and apparent lack of interest on the part of Ladbrokes to engage in a possible takeover deal, it will not be making future proposals after careful consideration.
MGM proposed an $11 billion (£8.1 billion) buyout bid for Ladbroke in the early part of this month in a bid to leverage an increase in the demand for online gambling due to the coronavirus pandemic. However, Entain, parent owners of Ladbrokes, said the offer on the table was not a commensurate value of the company. Entain owns other online sports betting businesses and betting sites such as Eurobet, Gala, Partypoker, Bwin, Coral, and Foxy Bingo.
As soon as the news about a possible takeover of Ladbroke by MGM and other interested investors became public knowledge, shares in Entain went as high as 25%, with many believing that a deal could pull through. However, the recent disclosure by MGM on Tuesday of its stance on the deal dropped Entain’s shares by 15% while that of MGM surged by 2.6%, Financial Times reports.
MGM, which has been a significant player in the Las Vegas gambling industry over the years, said it will be going forward with the existing partnership it has with Entain via BetMGM. BetMGM is a joint venture between the two companies operating in many states across the United States.
“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,” MGM CEO Bill Hornbuckle said in a statement.
Einstein agreed with the position taken by MGM. The company said it has a clear growth and sustainability trajectory, backed by the necessary and premier technology that will give shareholders a return on their investment.
Entain announced plans for a new management team, with CEO Shay Segev stepping down at some point this year. Segev said he is leaving the British gambling company to take charge of a sports streaming firm. The news of Segev came some days after the company declined further talks with MGM.
MGM’s failed bid is the latest attempt by the casino chain to delve into the online gambling industry.