Ladbrokes owner says €9bn offer by casino MGM undervalues its business; Paddy Power shares surge     

News of a takeover approach of Ladbrokes from US casino operator MGM Resorts helped send shares of other gambling firms much higher. Picture: Nick Ansell/PA Wire

Ladbrokes owner Entain said an $11bn (€9bn) takeover approach from US casino operator MGM Resorts significantly undervalued its business, as companies move to capitalise on an expected boom in US betting.

The news also helped send the shares of other gambling firms much higher, with Paddy Power-owner Flutter at one stage jumping almost 4.5% to value the Irish-based multinational at €30.3bn. Flutter has also built a significant presence in the US through acquisitions in the last two years.     

The US is widely viewed as the next big growth market following a 2018 Supreme Court ruling that lifted a ban on sports betting. US companies have sought partnerships to tap European expertise, including Caesars Entertainment’s deal for Britain’s William Hill.

MGM Resorts Spurned in Billion Takeover Bid of Parent of UK’s Ladbrokes https://t.co/ZNV2KWGfIh pic.twitter.com/pccxeoI7dK

— Shinoy E Kalarickel (@EShinoy) January 4, 2021

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 US. 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-US operations. 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. Davy said the proposal undervalued Entain’s operations, including its prospects in the US. 

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. 

• Reuters and Irish Examiner staff