Shares of British bookmaker Entain jump after MGM Resorts sale

Shares of British bookmaker Entain jump after MGM Resorts sale

Shares of Entain, which rejected a takeover offer from MGM Resorts this year, went up to a record high on Wednesday after a $4.4 billion asset sale in the British bookmaker prompted bets on bid for the U.S. Casino group.

Entain, which owns the Ladbrokes and Coral brands, knocked back a $11 billion offer from MGM in January as too low. But some investors expect that MGM's sale of its stake in MGM Growth Properties will give it fresh cash that could encourage MGM to make another bid on Entain, analysts said.

Investors have been debating the possibility of MGM returning with an improved bid for ENT since its first unsuccessful bid, Davy analyst Michael Mitchell said via email.

The market believes the strengthening of the balance sheet, following today's news, has increased the possibility for the same.

MGM said in its announcement on Wednesday that the stake sale would give it $11.6 billion of international operations liquidity available to enable execution of its goal to become the premier gaming industry.

British companies had been tapping into the expertise of American rivals in the past year as sports betting took off in the United States during the coronavirus crisis. William Hill was taken over by Caesars Entertainment, while Bally's Corp. agreed to a possible takeover by Gamesys in March by Bally's Entertainment.

When it dropped its plans to bid for Entain in January, MGM said it would not submit a revised offer. MGM and Entain continued to collaborate on their 50-win BetMGM joint venture in the United States.

Neither Entain nor MGM responded immediately to Reuters requests for comment.

Entain's shares rose 8% to an all-time peak and were the top gainer in the FTSE 100 index, while other gambling companies Flutter and 888 Holdings have equally increased after MGM's announcement between 3% and 6%.