Entain says MGM's $11 bln bid undervalues company

MGM Resorts is making a deeper bet into sports gaming. The American casino operator made an $11 billion bid for the owner of the Ladbrokes brand, Entain.

But the British gambling company said Monday that offer significantly undervalues its business even though it represents a 22% premium to its share's last closing price. The Wall Street Journal reports that a leading shareholder, billionaire mogul Barry Diller’s IAC group, is backing MGM’s move.

Investors drove Entain shares up as much as 28% to an all-time high, making them the top gainer on the FTSE.

MGM and Entain know each other; they run a joint venture online betting platform in the U.S.

American companies have been seeking to tap European expertise to capitalize on the expected boom in U.S. sports betting, now that the Supreme Court has lifted a ban on that. In September, Caesars Entertainment agreed to buy William Hill for nearly $4 billion. A deal between Entain and MGM would raise questions about the future of UK betting shops after Caesars said it could sell off the British company’s non-U.S. operations, but an Entain spokesman told Reuters there was no detail on that just yet.

An MGM spokesman said the company had no comment. MGM shares fell nearly 4% in early trading Monday.