As sports betting becomes increasingly popular and mainstream across the US (thanks to a shift in state laws that has made the practice legal in a growing number of states), DraftKings, the US fantasy sports/sports gambling company, has made a roughly £16.6 billion ($22.7 billion) offer for the UK-based gambling platform Entain.
Entain confirmed Tuesday that it had received the offer “the consideration for which would include a combination of DraftKings stock and cash.” Per the FT, this is the second time this year a rival has sought to acquire the business and consolidate the fast-growing US market.
The bid, which was submitted in recent days, valued Entain at more than £25 ($34)/share, according to a source with knowledge of the matter who spoke with the FT. CNBC has reported that the offer would consist mostly of stock.
DraftKings isn’t the only recent suitor for Entain. The British firm, which owns brands like Ladbrokes, Coral and Bwin, received an £8 billion (nearly $11 billion) takeover bid from the US casino group MGM in January, roughly half the valuation that DraftKings has assigned. However, Entain already has a joint venture with MGM to offer sports betting in the US via a platform called BetMGM. However, that deal could be scrapped if the DraftKings bid is accepted.
In a filing with the LSE confirming the offer, Entain’s board confirmed that it received a proposal from DraftKings, which would include a combination of stock and cash. The filing did not contain any information on the price of the offer. “A further announcement will be made as and when appropriate,” Entain noted in the filing. “Shareholders are urged to take no action at this time.”
Should DraftKings win the deal, it would dramatically increase its overseas presence as sports betting continues to expand in popularity not just in the US, but around the world.
Since it first went public via SPAC, DraftKings has emerged as one of the most successful companies to list via a SPAC (special purpose acquisition company) and is widely considered one of the catalysts for the subsequent SPAC boom. The company’s market value has risen more than 6x, since it first listed at a $3.3 billion valuation in April 2020 through a merger with Diamond Eagle Acquisition Corp, a Spac led by veteran Hollywood executives Harry Sloan and Jeff Sagansky.
Entain shares soared by double digits on news that DraftKings had doubled MGM’s offer (Entain’s management said at the time that the MGM offer had significantly undervalued the firm, and rejected it).
For what it’s worth, MGM has a say when it comes to the sale of Entain’s US assets.
“Any transaction whereby Entain or its affiliates would own a competing business in the U.S. would require MGM’s consent,” the company said in a statement. “MGM will engage with Entain and DraftKings, as appropriate, to find a solution to the exclusivity arrangements which meets all parties’ objectives.”
DraftKings confirmed the size of the offer Tuesday morning.
CNBC’s @davidfaber: @DKSportsbook has offered $20 BILLION for Entain https://t.co/PaeZpBZpqc
— Darren Rovell (@darrenrovell) September 21, 2021
The big question now: Will MGM return with another offer raising its valuation for Entain? Or will another bidder come out of the woodwork? Louis Capital Markets analyst Ben Kelly speculated on Tuesday that Las Vegas Sands might make a bid of its own.
