Investment.com — Thursday morning trading in London saw an almost 10% decline in Entain (LON:ENT) shares after MGM Resorts (NYSE:MGM) ended any speculation that it might acquire the British bookmaking company.
Since months, investors have been betting that MGM will complete a full takeover in order to expand their current collaboration with Entain. However, MGM determined that the software developed by the Swedish company LeoVegas, which it acquired in September, would help it expand its online betting operation more effectively.
Bill Hornbuckle, chief executive of MGM, stated on an analyst call after presenting the company’s quarterly results late on Wednesday, “The simple answer on Entain is no, we’ve moved on. “We started allocating capital,” the statement went. “We’re going to go down in our own direction.”
takeover ambitionsEntain has seen significant revenue growth from BetMGM’s online sportsbook, but the U.K. company’s cash flow has been negatively impacted by the sportsbook’s failure to turn a profit. At its most recent quarterly results, Entain stated that it would stop providing financial support for the business once it achieved profitability. In the second half of this year, it is anticipated that its earnings before interest, taxes, depreciation, and amortisation will become positive.
Due to new operations in more U.S. states, BetMGM continued to be Entain’s most rapid driver of growth, with revenue increasing 71% year over year in the fourth quarter. It’s uncertain, though, if it can maintain that growth as MGM’s own enthusiasm in the project wanes.
ALSO READ THIS :Turkey earthquake : Death toll crosses 16,000