ShareDraftKings has bailed out of its bid to takeover Entain, walking away from the $22.4 billion offer without explanation. This is the second attempt to take control of Entain by an American company this year, after MGM Resorts declined to improve on its $11 billion indicative offer.
Big Surprise
Industry insiders were reportedly surprised at news of the deal collapsing after a deadline extension until November 16 was agreed last week.Jason Robins, DraftKings CEO, gave a statement to the media saying that after several discussions with the Entain board the firm would not be tabling a formal offer. He added:
“We are highly confident in our ability to maintain a leadership position and achieve our long-term growth plans in the rapidly growing North America market.”
Entain published a statement of its own, detailing areas that would treble its total addressable market to $160 billion.
Because Entain is listed on the London Stock Exchange, there must be a six-month cooling off period before another takeover attempt can happen. The news of this instantly hit the share price with a 12% drop recovering to a 6% fall.
Complicated Deal
This failed deal between DraftKings and Entain is just a single part of what is turning into a complicated situation for the online gambling giants of the world.The Federal ban on sports betting in the US was rescinded in 2018, leaving a vacuum in each state to be filled. British firms have built businesses in the US, while the bigger American companies have flexed their financial clout, attempting to take over smaller operations with potential.
European firms are known to have experienced talent, making them attractive targets for US-based companies.
Recently Caesars Entertainment bought out William Hill in a £2.9 billion agreement, but then quickly sold off the European branches, including 1,400 high-street bookmakers in the United Kingdom. 888 Holding moved quickly to acquire the unwanted subsidiaries, paying £2.2 billion.
Entertain, owner of Coral, Ladbrokes and Bwin, has a joint venture in the United States with MGM Resorts—BetMGM. This company is a rival to DraftKings, which adds the complication of what to do if DraftKings comes back into the market to buy Entain. MGM already indicated that if this happens they will seek complete control of BetMGM.
