Shares in Entain ENT, +2.30% rose more than 2% on Monday, after the U.K. gambling company raised its offer for rival Swedish sports betting firm Enlabs.
The FTSE 100 company said it had increased its all-cash offer from SEK40 per share to SEK53 per share, giving Enlabs, which operates brands such as Optibet and NinjaCasino, a valuation of SEK3.7 billion ($440 million).
In a statement to the stock market, Entain GMVHY, -0.40% said around 51% of shareholders had already accepted the offer, which it said was final.
Shares in Entain, which have risen more than 27% so far this year, were 2.48% higher in early morning London trading on Monday.
Entain GMVHF, +0.34%, which renamed itself from GVC Holdings in January, is one of the world’s largest sports betting and gaming groups operating in the online and retail sector, and owns brands including Ladbrokes, Coral, Bwin and Partypoker.
Read: Entain shares nosedive as MGM says it won’t go forward with offer
It itself became the target of an $11 billion all-share bid from MGM Resorts MGM, +1.01% in January, as the U.S. casino giant, which runs the Bellagio casino in Las Vegas, made an attempt to move into the online gambling business. Two weeks later, MGM abandoned its attempt to buy Entain after its bid was rebuffed by the target’s board.
A surge in online betting from stay-at-home customers during the COVID-19 pandemic has triggered many deals in the bookmaking sector. Analysts at JPMorgan Cazenove said in a research note on Feb. 26 that online gaming benefited from pandemic tailwinds in 2020 that will continue into the early part of this year.
However, they downgraded Entain’s stock to ‘neutral’ from ‘overweight,’ arguing that “growth will be harder to come by across the rest of 2021 given tough comps [comparables], U.S. investment will continue to constrain profitability, while there is a regulatory headwind in Germany and regulatory uncertainty” in the U.K.
“Against this background and given substantial outperformance, we downgrade Entain to neutral and maintain a neutral on Flutter,” the analysts noted.
Dublin-based Flutter FLTR, +4.20%, which owns the PaddyPower and SkyBet brands, spend $4.2 billion last year to increase its stake in the U.S. daily fantasy sports company FanDuel.
Read: Flutter Entertainment strikes $4.2 billion deal to control most of FanDuel
Entain GVC, +1.38% made an initial offer of SEK40 a share for Enlabs on Jan. 20. But it was forced to raise its bid, after Alta Fox Capital Management and other Enlabs shareholders representing more than 10% of shares outstanding said that they would reject it.
At the time, Alta Fox, which is Entain’s largest shareholder with 3.7% of the company’s stock, said Entain’s initial offer of SEK40 a share for Enlabs “materially undervalued” the Swedish company and that the minimum fair price that would compensate shareholders is SEK55 per share.
“Entain is able to provide the scale and platform needed to further support Enlabs’ long-term growth, and we firmly believe that Entain will be the best home for Enlabs, its employees and customers,” said Chief Executive Rob Wood in a statement.
Commenting ahead of Entain’s full-year results on Mar. 4, Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “During the pandemic there has been a surge in online betting activity and fresh lockdowns are likely to have continued that trend. Looking ahead, the easing of restrictions could dent revenues as customers turn to other forms of entertainment, but sports events coming back to stadiums should help keep growth on track.’’
Entain said last month that it had made an offer to buy the wagering and media business of Australian betting firm Tabcorp Holdings, as it looks to expand in the country. It said discussions were at an early stage.
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