Casino and hotel major MGM Resorts International said Tuesday that it will no longer pursue an acquisition deal with Ladbrokes owner Entain after Entain rejected MGM's $11 billion all-stock offer.
MGM said in a statement that after "careful consideration" it will no longer be making any new offers to acquire Entain.
MGM initially submitted the $11 billion takeover proposal for the British gaming company earlier in the month. Entain rejected the offer and said that the offer significantly undervalued the company and its growth prospects. The British company said that stakeholders remained unconvinced of the "strategic rationale" of the deal.
Entain's share price surged by more than 25% after MGM's acquisition offer was made public. The surge indicated that investors were expecting MGM to make a higher offer if its initial bid was rejected.
MGM planned to acquire Entain to bolster its digital gaming portfolio and increase its presence in the rapidly growing segment. Entain owns highly popular online and offline gaming brands in Europe, including Coral and Ladbrokes.
Following MGM's announcement Tuesday, Entain's share price dropped by more than 15% in London. The stock closed slightly higher on Wednesday local time at £1,274 per share. Meanwhile, MGM's share price in the U.S. rose by more than 2.6% on the news. The stock closed at $30.53 per share Tuesday.
In its statement, MGM said that it was still committed to BetMGM - its joint venture company with Entain. The joint venture operates online gaming and sports betting businesses in more than a dozen U.S. states.
"We remain committed to working with Entain to ensure its strong momentum continues as it expects to be operational in 20 states by the end of 2021," MGM said.
In a regulatory filing in London, Entain echoed MGM's sentiments and said that it was also committed to the growth of the joint venture.
"Entain has a clear growth and sustainability strategy, backed by leading technology, that it is confident will deliver significant value for stakeholders," Entain said.