sports betting deal-making space in 2021.
The move comes exactly a week after UK-based Entain extended a deadline for DraftKings to make a firm proposal until mid-November. Earlier in the third quarter, DraftKings completed the transition to an in-house back-end tech platform powered by SBTech. A critical piece of the proposed acquisition centered on Entain’s tech stack, which is responsible for facilitating about 2 million global sports bets per day.
Shortly after the FanDuel as the three definitive leaders of the U.S. sports betting space by market share.
DraftKings’ massive proposal also had global ramifications. If the two parties were able to consummate a deal, DraftKings likely would have become a top player in Europe while challenging archrival Flutter for designation as the world’s top sports betting operator. Flutter is the parent company of FanDuel.
“After several discussions with Entain leadership, DraftKings has decided that it will not make a firm offer for Entain at this time,” DraftKings CEO Jason Robins said in a statement. “Based on our vertically-integrated technology stack, best-in-class product and technology capabilities, and leading brand, 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.”
Next steps z45i
Bound by restrictions under Rule 2.8 of the UK takeover code, DraftKings is precluded from making a firm offer for Entain for the next six months following the date of Tuesday’s announcement. DraftKings said Tuesday that the company is permitted under Rule 2.8 to waive the restrictions under certain circumstances, including an agreement of the board of directors of Entain, the announcement of a whitewash proposal by Entain, a reverse takeover, or instances where the takeover has determined that there has been a “material change of circumstances.”
In a statement released Tuesday, Entain said it is focused on executing its “growth and sustainability” strategy underpinned by leadership through BetMGM in the rapidly growing North American market. Entain is also focused on expansion into newly regulated markets.
DraftKings’ move opens the door for MGM Resorts to revise a January proposal for Entain. The proposal from DraftKings doubled MGM Resorts’ $11 billion proposal for Entain that was rejected at the start of the year. At the time, Entain argued that MGM Resorts’ proposal substantially undervalued the company.
MGM Resorts In Again For Entain?#igamingindustry #sportsbetting https://t.co/76xwX2T03h
— Gaming Awards (@gamingawards) October 21, 2021
Earlier in October at the Global Gaming Expo in Las Vegas, MGM Resorts CEO Bill Hornbuckle warned that the company could block DraftKings from conducting business in the U.S. if the company completed a deal for Entain.
Shares in DraftKings surged more than 7% on Tuesday’s news, hitting session highs of $50.44. DraftKings had fallen 7% on Sept. 21 to around $52 a share after reports on the potential takeover surfaced.
DraftKings ended the second quarter of 2021 with $2.6 billion cash on its balance sheet. Speaking on the company’s second quarter earnings conference call, DraftKings CFO Jason Park noted in August that the company remained well-capitalized to execute its multi-year plan and explore accretive M&A opportunities. DraftKings is scheduled to release its third quarter earnings on Nov. 5.
I have a feeling $DKNG may now take a run at $RSIhttps://t.co/tdmmKvHk7D
— Will Meade (@realwillmeade) October 26, 2021
While DraftKings is down 32% from March when it hit a 52-week high at $74.38 a share, it is still up considerably from last October, when the company traded around $35.
