Not working out
DraftKings has revealed that it will no longer be pursuing a takeover of Entain. The US-based gambling operator decided to not make a firm offer after having further discussions with the Entain board. DraftKings did state on Tuesday that it might end up making a firm bid in the future if there is a “material change of circumstances.”
DraftKings’ share price was up almost 5%
DraftKings CEO Jason Robins stated that the operator remains confident in its brand and technology. He believes that the company is well-positioned to “maintain a leadership position and achieve our long-term growth plans in the rapidly growing North America market.” After morning trading, DraftKings’ share price was up almost 5%.
Taking it in stride
In response to DraftKings deciding to no longer pursue a takeover bid, Entain emphasized its confidence regarding its future prospects as an independent business. In a statement, the company’s board of directors said: “Entain has an outstanding track record of growth having delivered 23 consecutive quarters of double-digit online NGR growth, representing a three-year CAGR of 19% across 2021.”
The company will now look to strengthen its existing market positions, as well as expand in the US and grow in markets that are newly regulated. Entain also has plans to enter new spaces such as esports and to continue to acquire and retain customers.
Two different proposals
In September, DraftKings made two different informal proposals in an attempt to take over Entain. The initial offer was £25 ($34.43) per share in a cash and stock deal. The Entain board rejected that offer, which led to DraftKings upping its bid to £28 ($38.56) per share. This would have valued Entain at £16.4bn ($22.6bn) based on Entain’s share price on June 30, 2021. Neither of these were deemed to be firm bids and Draftkings initially had until October 19 to submit a firm offer. While this deadline got a week extension, no firm offer was ultimately made.
At the time of the deadline extension, Entain sought further clarity from DraftKings with regards to value creation for shareholders and the potential relationship with Entain’s joint partner in BetMGM, MGM Resorts International. It also wanted more information regarding the combined entity’s management structure and the ability for the acquisition to get over regulatory and anti-trust obstacles.
This was not the sole takeover approach that Entain has gotten so far in 2021. In January, MGM Resorts International made an $11bn bid for the gambling group. However, this was rejected as Entain believed that it undervalued the company; MGM Resorts declined to increase its offer.