US casino giant MGM Resorts has made an $11bn (£8.1bn) offer for British gaming organization Entain, which owns Ladbrokes.
The move is the latest attempt by a casino operator to move into the online gambling business.
In addition to its chain of High Street betting shops, UK-based Entain also owns a number of online sports betting and gambling sites.
Entain confirmed the offer, first reported by the Wall Street Journal, but said the price was too low.
It had recently rebuffed an earlier $10bn (£7.3bn) all-cash approach from MGM, the newspaper said.
In a statement, Entain said the latest bid approach “significantly undervalues the company and its prospects”.
MGM Resorts, which runs the Bellagio casino in Las Vegas, now has until the beginning of next month to decide whether to make a formal bid or to walk away.
FTSE 100-listed Entain. Which renamed itself from GVC Holdings last month, describes itself as “one of the world’s largest sports betting and gaming groups operating in the online and retail sector”.
Along with Ladbrokes, it also owns brands such as Bwin, Partypoker, Coral, Eurobet, Gala, and Foxy Bingo.
After news of the latest offer for the firm, investors started betting on Entain, pushing its share price up by more than 25% to £14.30 a share – above MGM’s offer of roughly £13.83 a share – a sign that market watchers are expecting a higher bid.
If the two firms do reach an agreement, it would follow another deal in September when MGM rival Caesars Entertainment agreed to buy UK-based William Hill for £3.7bn.
“Following Caesar’s proposal for William Hill a year ago, an offer by MGM for Ladbroke’s owner Entain isn’t exactly a surprise,” said Nicholas Hyett an analyst at Hargreaves Lansdown.
“The two are working together to take advantage of the recent legalization of sports betting in the US, a market worth a huge number of dollars a year.”
The new bid for Entain comes with financial backing from MGM’s largest shareholder, InterActiveCorp (IAC), which took a 12% stake in MGM Resorts last August.
At the time, IAC’s chief executive Barry Diller said it planned to work with MGM to expand its online gambling portfolio.
The attempted acquisition comes as the casino industry faces headwinds from the Covid-19 pandemic.
Bricks-and-mortar casino operators have struggled under travel restrictions.
The economy of Asian casino hub Macau shrank 49% in the first quarter of this year, while unemployment in Las Vegas reached 30% earlier in the year and remains well above the US average.
MGM Resorts, which is the operator of the Bellagio casino in Las Vegas, laid off 18,000 furloughed employees in the US in August. Numerous online gambling organizations, by contrast, saw a boost during coronavirus restrictions, prompting numerous casino owners to pivot their businesses towards on the web.
This article is picked up from BBC