MGM Resorts, a US casino operator, has withdrawn its bid to purchase its sports betting joint venture partner/online gambling Entain PLC. This led to a drastic fall in the share price of the firm.
This Tuesday, MGM released a statement saying it “does not intend to submit a revised proposal and it will not make a firm offer for Entain.”
According to MGM, they stated that they came to their decision “after careful consideration and having reflected on the limited recent engagement between the respective companies.”
The news led to a massive dump of Entain shares, which inadvertently led to a drastic fall – about 17 percent decrease – before the panic abated. However, the shares closed out, trading down on Tuesday which was about 12 percent from the close on Monday. On the other hand, MGM is currently trading with a 3 percent increase.
At the start of this year, MGM publicly showed interest in purchasing Entain, its partner in the ROAR Digital joint venture. They provide iGaming/betting in several US states through the BetMGM brand.
After getting a cooler than expected reply to its opening $11 billion all-stock offer, MGM managed to secure a commitment from Barry Diller’s InterActive Corp to heighten the stakes by up to $1 billion in cash.
Unfortunately, Entain was playing coy, and the vagueness surrounding its future played a role in Shay Segev’s decision, the CEO of Entain to announce his plans to leave Entain for a co-CEO role at DAZN – a sports streaming platform.
On Thursday, Entain will release a Q4 2020 trading update, released a statement Tuesday saying it “has a clear growth and sustainability strategy and it saw no difficulty in continuing to work closely with MGM on its US-facing joint venture.”
MGM’s statement to go back on its offer quoted CEO Bill Hornbuckle saying BetMGM “remains a key priority and MGM remains committed to working with Entain to ensure its strong momentum continues.”
All these investor reassurances will definitely not smoothen the palpable discomfort that may hang over future ROAR strategy sessions. However, it doesn’t seem that everybody is convinced that MGM has abandoned the idea of purchasing Entain completely at some point in the future.