proposed $22 billion acquisition of the U.K.-based gaming conglomerate, the companies said in separate statements released on Tuesday.
Under U.K. merger and takeover law, DraftKings had until Tuesday at 5 p.m. British Summer Time (BST) to either make an offer for Entain or decide not to make a formal offer to acquire the company. The window, according to Entain, has been extended until Nov. 16 at 5 p.m. London time.
Entain, the parent company of prominent European gaming operators such as bwin, Sportingbet, and Coral, ed MGM Resorts in launching BetMGM in 2018 as a 50-50 t venture. Shortly after Entain publicly released details of DraftKings’ cash-and-stock proposal on Sept. 21, MGM Resorts issued a statement asserting that “any transaction whereby Entain or its s would own a competing business in the U.S. would require MGM’s consent.”
MGM Resorts CEO Bill Hornbuckle reaffirmed that position in a public statement this month, cautioning that his company had the ability to block DraftKings from conducting business in the U.S. if the transaction for Entain is completed.
The DraftKings proposal is by far the largest involving a U.S. pure-play sports betting operator since the Supreme Court’s historic PASPA decision in 2018. If consummated, the deal would be the largest acquisition in the online gaming space on record. By comparison, Entain rejected MGM Resorts’ $11 billion acquisition attempt in January, claiming that the offer substantially undervalued the company.
DraftKings plans to continue to engage in discussions between the companies and to conduct more “substantive due diligence and analysis” regarding its possible offer, the company said in a statement Tuesday.
BetMGM, an online sports betting and iGaming platform, is one of the top three online sportsbooks nationwide in of market share. MGM Resorts appears concerned that it could lose Entain’s sophisticated back-end technology platform that facilitates about 2 million global sports bets per day. Sports wagers placed on BetMGM are powered by Entain’s tech stack.
Global sports betting ramifications 3us5u
The deal also has considerable cross-border implications for the global sports betting market. While DraftKings’ power play for Entain has been viewed as somewhat of a defensive move to deprive its top competitors of Entain’s tech platform, it would also enable DraftKings to expand beyond U.S. borders. DraftKings would also serve notice to Flutter, the parent company of FanDuel, that it is ready to play on a global stage.
Following DraftKings’ proposal, several Wall Street analysts urged the companies to consider a complex tri-party deal in which MGM Resorts would gain complete control of BetMGM. One option, according to Macquarie analyst Chad Beynon, includes a scenario where DraftKings could acquire Entain’s non-U.S. assets, then arrange for a sale/tech agreement with MGM Resorts for BetMGM.
Or, DraftKings and Entain could agree to extend the window several more times to prolong negotiations. A similar scenario transpired last year when Canadian security firm Gardaworld sought to acquire U.K. firm G4S in a months-long takeover battle. Gardaworld eventually lost an auction for G4S, the world’s largest private security firm, to Allied Universal, which won the bid for the British firm in February.
The deadline for a deal with DraftKings can be further extended by the board of Entain, with the consent of the company’s takeover board, Entain said in a statement.
$DKNG news drop of the extension to Entain offer an opportunity to close shorts and cover calls.
It is about a month away so Draftkings is back to the $48-$54 range back in place.
— JustTradingHoy (@JustTradingHoy) October 19, 2021
For its part, DraftKings noted that it will continue to explore the potential benefits that the company could derive from a potential combination with Entain, including:
- Expansion into regulated and regulating markets.
- Accelerated product growth.
- Innovation in new and existing verticals.
Other news involving the companies 563q2m
Separately, DraftKings announced Tuesday that it had launched its online sports betting platform in Connecticut through its deal with Foxwoods Resorts Casino. DraftKings went live with its Connecticut online and mobile sports betting platform at 6 a.m. after completing a required soft launch, the company said in a statement. The first bet accepted on the platform was a $25 wager on the Los Angeles Dodgers (-180) to defeat the Atlanta Braves in Tuesday night’s Game 3 of the National League Championship Series.
DraftKings gained more than 2% in Tuesday’s morning session, eclipsing $50 a share, before reversing course to around $48 at 11:30 a.m. ET. DraftKings still remains below last month’s trading levels when it sunk 7% to around $52 a share on news of the speculative deal. DraftKings is still up by more than 3% year to date.
Connecticut, we have arrived.
Sign up now: https://t.co/FSq70UblYs pic.twitter.com/3GaaWjj1L7
— DraftKings Sportsbook (@DKSportsbook) October 19, 2021
Entain, meanwhile, announced Tuesday that the company completed its acquisition of the eSports assets of Seattle-based Unikrn, an eSports betting and media company. The deal paves the way for Entain to begin offering eSports betting products in 2022, the company said in a statement.
“With Unikrn, we’ll now be able to offer competitive gamers and eSports fans alike rewarding experiences surrounding the games and events they love,” said Justin Dellario, who serves as managing director of eSports at Entain.
On the London Stock Exchange, Entain traded around 2,150 pence Tuesday afternoon, down considerably from last month’s highs when reports of the DraftKings proposal sent shares soaring more than 20% to 2,400 pence.
