The American casino giant MGM Resorts International (NYSE:MGM) has initiated an 8.1 billion-pound ($11.1 billion) takeover offer for the UK gambling group Entain (LON: ENT), which operates popular sports betting sites such as Ladbrokes, Bwin, and Coral.

MGM’s offer is primarily with stock, seeking to exchange 0.6 MGM shares for each share of Entain, with the offer representing a 22% premium to Entain’s share price as of the time it was made. In addition to offering shares, MGM says that it’ll include a “limited partial cash alternative” for shareholders of Entain who intend to receive cash and not MGM shares from the offer.

Even with MGM’s lucrative offer, Entain’s board is actually opposing the proposed takeover, stating that MGM’s offer “significantly undervalues” the British sports betting giant. It’s also requested officials from MGM to provide additional information regarding the strategic rationale for MGM buying Entain.

Apparently, investors seem to agree that MGM’s offer for Entain undervalues the sports betting giant, with Entain’s share price having surged over 26% since the announcement of the proposed takeover and given the company a market cap that’s greater than the offer brought by MGM. With that, there could be another even bigger bid made by MGM.

In its statement, the board of Entain urged its shareholders to take no action and noted that there’s no certainty of MGM making a higher bid for the company. Under takeover laws in the UK, MGM has until February 1, 2021 to announce a firm intention for an Entain takeover or not. 

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