LONDON BRIEFING: Entain Follows William Hill In Attracting US Suitor

(Alliance News) - Entain, the gambling firm formerly known as GVC Holdings, early Monday ...

Alliance News 4 January, 2021 | 8:10AM
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(Alliance News) - Entain, the gambling firm formerly known as GVC Holdings, early Monday confirmed a press report that it has received a possible takeover offer from US casino operator MGM Resorts International.

If a deal is concluded, Entain would become the second UK gaming operator, after William Hill, to be taken over by its US partner.

The Wall Street Journal on Sunday, citing sources familiar with the matter, had said MGM was looking to buy Entain which had a market capitalisation of about GBP6.63 billion last week.

The WSJ said the value of the bid was above GBP12.85 per share. Entain shares closed at 1,133.50 pence on Thursday.

Entain said on Monday: "Under the terms of its most recent proposal, MGMRI would offer 0.6 MGMRI shares for each Entain share. Based on closing prices on 31 December 2020, being the last trading day prior to this announcement, MGMRI's proposal represents a value of 1,383 pence per Entain share and a premium of 22% to Entain's share price."

Entain shares were up 26% early Monday at 1,426.00p.

The company said Entain shareholders would own just shy of 42% of the enlarged company under the terms of the offer.

Entain, however, said it told MGM the bid "significantly undervalues the company and its prospects".

"Entain shareholders are encouraged to take no action," the company added. MGM has until February 1 to make a firm offer or walk away.

The news comes after London-listed peers of Entain have received interest from the US or have moved to boost their exposure in the lucrative gambling market there.

Back in September, William Hill agreed to a GBP2.9 billion takeover by US casino and resort operator Caesars Entertainment. And in December, Paddy Power owner Flutter Entertainment struck a USD4.18 billion deal to own nearly all of the US FanDuel gaming business.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: up 1.6% at 6,564.06

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Hang Seng: up 0.9% at 27,488.02

Nikkei 225: closed down 0.7% at 27,258.38

DJIA: closed up 196.92 points, 0.7%, at 30,606.48 on Thursday

S&P 500: closed up 0.6% at 3,756.07 on Thursday

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GBP: up at USD1.3701 (USD1.3656)

EUR: soft at USD1.2267 (USD1.2273)

Gold: up sharply at USD1,924.70 per ounce (USD1,894.00)

Oil (Brent): up at USD52.90 a barrel (USD51.10)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Monday's Key Economic Events still to come

OPEC and non-OPEC ministerial meeting

0930 GMT UK capital issuance

0930 GMT UK CIPS-Markit manufacturing PMI

0930 GMT UK lending to individuals and businesses

0955 CET Germany manufacturing PMI

1000 CET eurozone manufacturing PMI

0945 EST US manufacturing PMI

1000 EST US construction spending - construction put in place

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A new national lockdown looks likely to be imposed across England as the UK government was accused by Labour of letting coronavirus "get out of control". As events developed rapidly, the Daily Mail reported the government's key "Covid-O" committee that oversees restrictions was expected to meet on Monday to decide changes to the coronavirus regime. The newspaper quoted a government source as saying ministers were looking at putting even more areas of England into the toughest Tier 4, which already covers a total of 44 million people – or 78% of the population – after changes which came into effect on Thursday. Plans for a return of shielding for vulnerable people in England are being drawn up by the government, The Daily Telegraph reported. After UK Prime Minister Boris Johnson signalled tougher restrictions would be brought in within weeks, pressure mounted on the government to act far more swiftly as Labour demanded a lockdown within hours.

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The first doses of the Oxford University and AstraZeneca vaccine are set to be administered in what has been described as a "pivotal moment" in the UK's fight against coronavirus by the country's health secretary. Just over half a million doses of the newly approved vaccine will be available from Monday, with vulnerable groups already identified as the priority for immunisation. Jabs will be delivered at some 730 vaccination sites already established across the UK, with others opening this week to take the total to more than 1,000, according to the Department of Health & Social Care. The vaccine will be administered at a small number of hospitals in England for the first few days, including at Oxford University Hospitals NHS Foundation Trust, where it was developed. Five other hospital trusts – two in London, and others in Sussex, Lancashire and Warwickshire – will also start delivering the vaccine on Monday.

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Ireland's manufacturing sector growth picked up strongly in December, survey results from AIB and IHS Markit showed, as companies stocked up ahead of the end of the Brexit transition period in the UK. The AIB Ireland manufacturing purchasing managers' index rose to 57.2 points in December from 52.2 in November, both readings well above the neutral score of 50 and indicating expansion. New orders and factory output both increased at the fastest pace since July's post-lockdown bounce. The five-point month-on-month improvement in the PMI reading is the third largest on record for the measure, AIB said, and represents the sixth improvement in the Irish manufacturing sector in the past seven months.

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China's manufacturing sector continued to improve in December, albeit at the slowest rate in three months, figures from Caixin showed. The headline seasonally adjusted purchasing managers' index slipped to 53.0 points in the last month of 2020 from 54.9 in November and 53.6 in October. The December reading still signalled a healthy factory sector, as the Chinese economy continued to recover from the coronavirus outbreak.

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The Japanese manufacturing sector ended 2020 with operating conditions stabilising in December, the latest survey results from au Jibun Bank and IHS Markit showed. The headline au Jibun Bank Japan manufacturing purchasing managers' index rose to the 50.0 no-change threshold in December from 49.0 in November. This marked the highest reading of the PMI since April 2019, as the sector continued to gradually recover from damped operating conditions, exacerbated by the Covid-19 pandemic. The improvement in the health of the Japanese manufacturing sector was supported by a stabilisation in output levels in December, the survey results showed.

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Japanese Prime Minister Yoshihide Suga said vaccine approval was being speeded up and border controls tightened to curb the spread of the coronavirus as he promised on Monday to consider declaring a state of emergency. Tokyo governor Yuriko Koike and the governors of Saitama, Chiba and Kanagawa had asked the national government on Saturday to declare the emergency after the capital recorded a daily record of 1,337 cases on New Year's Eve. Worries have been growing about holding the Olympics in July, which will mean the arrival of tens of thousands of athletes, officials and media. Suga stressed his determination to hold the Olympics, which he said will serve as "proof that people have overcome the coronaivus", giving "hope and courage". Preparations were moving ahead, he said.

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BROKER RATING CHANGES

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BARCLAYS RESUMES TESCO WITH 'OVERWEIGHT' - TARGET 290 PENCE

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CITIGROUP RAISES IAG TO 'BUY' (NEUTRAL) - PRICE TARGET 195 (150) PENCE

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CITIGROUP CUTS EASYJET TO 'SELL' (NEUTRAL) - PRICE TARGET 650 (750) PENCE

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JPMORGAN RAISES CONVATEC TO 'NEUTRAL' ('UNDERWEIGHT') - TARGET 196 (176) PENCE

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COMPANIES - FTSE 100

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Ferguson said it has sold Wolseley UK to private equity firm Clayton, Dubilier & Rice for GBP308 million. In the financial year that ended July 31, the unit generated revenue of USD1.88 billion. The sale means Ferguson can "focus entirely" on its North American business, noted Chief Executive Kevin Murphy. "The board's current intention is to make a return of substantially all of the net cash proceeds of sale to shareholders by way of a special dividend," Ferguson added.

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COMPANIES - MAIN MARKET AND AIM

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Martin Sorrell's media firm S4 Capital kicked off the year with a pair of acquisitions. S4 said it has bought integrated agency Decoded Advertising and will combine it with its MediaMonks unit. It also has acquired Metric Theory, a digital marketing firm, which will merge with S4's MightyHive. The news comes after "much of the uncertainty" related to Brexit has been eased, due to the UK agreeing a trade deal with the EU, S4 said. "The company will now implement even faster its strategy of creating a new age/new era advertising and marketing services model and deploy its digital capabilities even more effectively, not only in Europe, but in the Americas, Asia-Pacific, Africa and the Middle-East. Further moves will be announced shortly," S4 added. "The consideration for both Decoded and Metric Theory will be paid, as is usual, half in cash and half by the issue of S4 Capital ordinary shares, with minimum customary lock-ups and no earn-outs, which create fragmentation and hinder a unitary structure."

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Monday's Shareholder Meetings

Primary Health Properties PLC - GM re acquisition of Nexus

Sensyne Health PLC - GM re equity raise

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By Tom Waite; thomaslwaite@alliancenews.com

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