* MGM does not intend to submit revised proposal
* Entain had earlier rejected $11 billion approach
* Look forward to working with MGM on JV -Entain
* Entain shares down nearly 12% (Adds details on MGM’s decision to end deal talks, adds share prices, background)
Jan 19 (Reuters) - Casino operator MGM Resorts International on Tuesday ditched plans to buy Ladbrokes owner Entain after the British company rejected an $11 billion takeover approach this month, sending Entain’s shares down nearly 12%.
The United States is seen as the next big growth market for sports betting, spawning a series of transatlantic partnerships tapping in to European technology and expertise. These include Caesars Entertainment agreeing last September to buy William Hill in a 2.9 billion-pound deal.
MGM said it would not submit a revised proposal or make a firm offer for Entain, which had said the approach announced two weeks ago significantly undervalued its business.
Entain shares closed down 11.9% at around 12.44 pounds in London. MGM shares were up 2.5% at $30.54 in New York trading late on Tuesday afternoon.
“We look forward to continuing to work closely with MGM to drive further success in the United States through the BetMGM joint venture,” Entain said in a statement.
Online betting firms have benefited during the COVID-19 pandemic-led lockdowns, as customers took to playing from home when casinos and betting shops were off-limits.
MGM had previously said a merger with the British bookmaker would be compelling and believed a deal would help expand BetMGM, which the two have operated since 2018.
The proposal, on the basis of 0.6 MGM share for each Entain share, was also backed by billionaire Barry Diller’s IAC . It valued Entain shares at 13.83 pence each when it was first announced.
Complicating matters, Entain Chief Executive Officer Shay Segev decided to step down just seven months into the role and in the middle of negotiations with MGM to take a job with sports streaming service DAZN.
Segev’s departure, as well as limited engagement in talks shown by Entain and a difference in price expectations between the two sides, led MGM to decide to walk away from the deal, according to a person familiar with the matter.
Entain, previously known as GVC, has itself expanded rapidly through a series of acquisitions and owns the bwin, Coral and Eurobet brands, operating traditional British high street betting shops as well as offering online gambling.
“While we are genuinely surprised MGM didn’t up its consideration ... we don’t think this changes MGM’s ability to secure equity value enhancing benefits from the attractively growing US sports betting and iGaming pie,” JP Morgan analysts said.
The brokerage said it would not rule out further discussions with Entain depending on how the company shareholders reacted, adding it would be tough for someone else to buy Entain given so much potential equity value coming from the 50/50 BetMGM joint venture.
Reporting by Tanishaa Nadkar in Bengaluru; Additional reporting by Joshua Franklin in Miami Editing by Keith Weir and Matthew Lewis