Entain says it rejected the offer because “the proposal significantly undervalues the company and its prospects,” according to a news release. Entain shares jumped 25% on the London Stock Exchange following speculation of an acquisition and the rejection.
MGM proposed $18.79 per Entain share (13.86 British pounds), a 22% premium on its Dec. 31 closing price, according to both sides. The offer, which would be funded primarily through MGM stock, valued Entain at just over $11 billion. Entain shareholders would own 41.5% of the combined company under the proposal.
It’s unclear if MGM might make another offer. Entain said it has asked MGM for more information about the strategic rationale for an acquisition, and MGM said it will continue to engage with Entain in that capacity. MGM representatives didn’t immediately respond to an email seeking additional comment.
Entain’s gambling brands include Coral, Ladbrokes, bwin and partypoker. It also owns most of its backend technology, and provides services to a number of other third-party operators in a business-to-business manner.
The two companies already have a business relationship—they’re 50/50 partners in BetMGM, an online sports betting and gambling brand in the U.S. An acquisition would let MGM control all of that joint venture, and give it full access to Entain’s tech.
MGM’s offer had the backing of its largest shareholder, IAC, according an MGM statement. The company’s stock is down 4% on Monday afternoon.