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Bets are off as MGM folds in £8bn pursuit of Ladbrokes owner

Ladbrokes
Ladbrokes

Las Vegas casino firm MGM Resorts has abandoned its £8bn bid to buy Ladbrokes and Coral owner Entain after failing to win the support of investors.

The shock departure of Entain chief executive Shay Segev last week is also believed to have played a role in MGM’s decision to walk away.

Entain shares plunged 15pc, slashing gains won on the expectation that the Las Vegas casino operator would sweeten an offer made at the start of the month.

However, not all shareholders missed out. Los Angeles-based Capital Group, one of the world’s biggest investment firms, effectively booked a £60m profit by selling tens of millions of shares this month after stock surged when the proposed deal was unveiled.

Entain shares had been trading roughly a quarter higher than their December closing price after the approach was confirmed on Jan 4.

MGM’s refusal to increase its bid, which had been rejected by the Entain board, came as shareholders called on the FTSE 100 group to hold out for a significantly improved offer.

One of Entain's largest investors said: "They were hearing pretty clearly that the acceptable value was much higher than they could afford."

MGM is now barred from making a fresh offer for six months under City rules.

Formerly called GVC, Entain works with MGM in a US online gambling joint venture - part of an American goldrush as a decades-long ban on sports betting is repealed state by state.

A string of casinos and media companies have joined forces with UK bookmakers in the hope of using their online gambling expertise to conquer what is expected to become the world's biggest market.

One Entain shareholder insisted last week that MGM’s offer was “not even in the right postcode”.

Another said: “This is [video rental retailer] Blockbuster putting in a bid for Netflix before it hits scale.”

However, MGM’s biggest investor cautioned the company against overpaying for Entain.

Media mogul Barry Diller, chairman of investment firm IAC, said he was sceptical about the deal. He said: “If it doesn’t [happen], I am sanguine.”

The swoop was further complicated by the shock departure of Mr Segev, who had only been in the top job at Entain for seven months.

He and other executives on the Entain board were understood to have been supportive of the MGM approach, in contrast to non-executives who wanted to hold out for a better deal.

Shares were 13.2pc lower at £12.27 in late trading, valuing Entain at £7.2bn.