- Standard Chartered enjoys double-digit gains on reports First Abu Dhabi could renew bid
- Entain slumps as MGM Resorts CEO rules out takeover
- First Abu Dhabi cannot bid again until summer under takeover rules
Takeover news dominated both ends of the FTSE 100 leaderboard on Thursday as emerging markets-focused bank Standard Chartered (STAN) surged on reports First Abu Dhabi Bank could renew its $35 billion offer while gambling stock Entain (ENT) fell as its US joint venture partner MGM Resorts International (MGM:NYSE) ruled out a bid.
Standard Chartered moved more than 10% higher to 763p while Entain shares fell 9.7% to £14.15 in the wake of the contrasting news.
In early January, First Abu Dhabi said it had explored a potential bid for Standard Chartered but it was no longer doing so. Under UK takeover rules the Middle East financial services firm was then essentially prevented from making a bid in the following six months.
However, a report from Bloomberg suggests a bid could be revived at the end of this lock-up period with a $30 billion to $35 billion price tag. As yet neither party has commented.
A PERINNEAL RUMOURED BID TARGET
Writing in January when details of the interest first emerged, Shore Capital analyst Gary Greenwood noted Standard Chartered had been rumoured as a bid target for longer than the 23 years he had been covering the banking sector.
He added: ‘Prior to the Global Financial Crisis, the main problem most potential western acquirers had was that Standard Chartered was simply too expensive, although in recent years this valuation differential has been eroded.
‘In addition, a takeover by either a western or Chinese bank would arguably have compromised the perception of Standard Chartered as regionally independent (i.e. it has no real home market, despite being UK listed), a change to which may have been damaging to its franchise from a political or regulatory standpoint.
‘A potential takeover by a Middle Eastern bank with deep pockets therefore represents a different angle of attack. As such, we do not know the reasons why the approach has not got beyond the initial stages of evaluation. In our view the valuation is attractive, so it may be just the difficulty of overcoming the political and regulatory hurdles associated with buying a large, complex bank.’
WHAT MGM’S STANCE MIGHT MEAN LONGER TERM
For Entain, comments from MGM Resorts president and chief executive Bill Hornbuckle saying the company had ‘moved on’ from Entain could be a case of unwelcome news for the share price in the short term but better news in the long term.
Entain rebuffed a £13.83 per share bid from MGM in January 2021 and DraftKings (DKNG:NASDAQ) mooted a £14 billion approach before withdrawing from the fray later the same year.
The company is still in the initial stages of seeking to capitalise on the US market opportunity through its 50% stake in BetMGM and, with the potential for a takeover receding, investors should now get to see how that opportunity plays out.
