US sports betting and daily fantasy sports expert DraftKings has approached fellow gambling firm Entain with a takeover offer valuing the latter at $22.4 billion.
Entain confirmed that it has received an acquisition proposal from the other company. Under that proposal, DraftKings would pay 28 pounds (approx. $38.20) per Entain share. The offer represents a premium of 46.2% to the British gambling powerhouse’s Monday closure.
DraftKings went public in New York in 2020 via a three-way merger with European sports betting technology provider SBTech and special purpose acquisition company Diamond Eagle Acquisition Corp.
London-listed Entain’s shares soared about 18% on news about the offer. If the company accepts the takeover bid, DraftKings would gain access to a host of leading international gambling brands, including bwin, partypoker, and Ladbrokes, among others.
News about the US betting firm’s approach to buy its rival operator emerge after Entain rejected an $11 billion bid from Las Vegas-based casino operator MGM Resorts International. The British company said at the time that MGM’s offer significantly undervalued it.
Reports surfaced in August that the casino giant might be preparing a new offer for Entain as it has accumulated cash in the months after its original proposal. MGM is set to receive $4.4 billion in cash as part of the sale of MGM Growth Properties, in which it is a majority stakeholder, to rival real estate investment trust VICI Properties.
DraftKings Has Until October 19 to Make a Firm Offer
Confirming news about the latest takeover bid it has received, Entain said that it had previously rejected a proposal from DraftKings and that the company now has until October 19 to make a firm offer for the British company’s operations.
DraftKings last month entered into an agreement to acquire another major US-focused online gambling business. The company is set to purchase Golden Nugget Online Gaming for $1.56 billion.
The sports betting operator’s renewed effort to buy Entain represents the latest M&A development in the US and global gambling industries. Sports betting has exploded in the US since the Supreme Court annulled a federal ban on the practice in 2018 and many European companies have been looking to gain greater foothold in this promising market through joint ventures or M&A deals.
Demand for wagering rocketed to new heights during the Covid-19 pandemic and this has prompted a further wave of consolidation.
Entain itself operates in the US through a joint venture with MGM. The two companies together run the BetMGM business which is present in multiple regulated states.
MGM said Tuesday that any deal in which its sports betting partner would own a competing business in the US would require the casino operator’s consent.
Source: DraftKings courts UK’s Entain with $22.4 bln offer as U.S. sports betting spurs deals, Reuters, September 21, 2021