Deal: DraftKings Bids $22B For UK Betting Giant Entain
A certain American company has been on a tear ever since going public last year. It’s DraftKings, a sports betting company that’s riding the high waves of increased legalization of mobile sports betting in the US and tearing its way into more business as time goes.
- In the US where DraftKings is based, there’s been a wave of legalization of sports betting spurred by the Supreme Court striking down a federal ban on it in 2018. It’s such that sports betting is now legalized in more than two dozen US states and more states are considering it.
- The wave has vaulted DraftKings to high growth thanks to the company being an early mover and working hard to build this growth, DraftKings has spent big money on acquisitions to expand. For example, just last month, the company bought online casino Golden Nugget in a $1.6bn all-stock deal that marked its biggest acquisition to date.
- Entain has confirmed in a statement that DraftKings offered to buy it for £28 per share in a mix of cash (£6.30) and stock (£21.70), giving it a valuation of £16.4bn ($22.4bn) net of debt or £18.4bn ($25.1bn) including debt.
- Interestingly, Entain says it rejected a previous DraftKings offer of £25 per share before the company came knocking again with a higher offer of £28. It implies that DraftKings is very keen on getting the company, not surprising as Entain is one of the foremost betting companies in the Western hemisphere such that a combo of it with DraftKings will be a sport-betting colossus to be reckoned with.
Entain is a holding company for many well-known betting brands, such as Ladbrokes, Coral, and Party Poker. It’s one of the biggest online betting operators both in the UK and US.
- DraftKings buying Entain could jeopardize the British firm’s partnership with MGM so it’s likely that the American casino giant would oppose the deal. In fact, it has already sent out a press release stating that “any transaction whereby Entain or its affiliates would own a competing business in the U.S. would require MGM’s consent.”
- MGM had sort of seen the writing on the wall that Entain was a likely acquisition target from a betting rival like DraftKings and thus earlier this year sought to buy Entain itself. It offered $11bn but got rebuffed quickly, an admittedly wise move now that Entain is fielding an offer double that amount.
- Maybe MGM will return with a bigger offer, only time can tell, but it’s apparent that the American company isn’t in favor of Entain being bought by one of its domestic rivals.