Entain has received a £25.00 per share offer, consisting of cash and stock, from DraftKings. However, the offer was rejected by Entain’s board. In response, DraftKings made a new proposal of £28.00 per share, with a cash portion of £6.30 and the remainder in Class A common shares. This represents a 46.2% premium on Entain’s closing share price on 20 September. If accepted, the offer would value Entain at £16.40bn (€19.23/$22.40bn) based on the current number of shares in issue.
Under the City Code on Mergers, DraftKings has until 19 October to submit a firm offer. However, Entain has stated that it may not receive any such bid. The board of Entain is confident about the company’s prospects as an independent business. It highlights its leading market positions, strong management team, and industry-leading technology. The board also emphasizes the potential for significant growth, with the total addressable market projected to reach $160bn.
Entain’s board further emphasizes its diversified and regulated revenues, as well as its commitment to player protection through its ARC program (Advanced Responsibility and Care). It notes that Entain’s joint venture BetMGM positions the company as a leader in the rapidly growing North American market.
Prior to this bid from DraftKings, Entain had previously rejected an $11bn bid from MGM Resorts International, its joint venture partner for the US-facing BetMGM business. MGM decided not to increase its offer in response to Entain’s rejection.
Industry analysts anticipate a wave of further consolidation in the market, suggesting that DraftKings’ bid is just the beginning. The future of the MGM partnership under DraftKings ownership, the possibility of a counter offer leading to a bidding war, and the potential targets for future consolidation are among the key questions being considered by stakeholders.
MGM has confirmed that it has no intention of selling its stake in BetMGM. Entain reported strong financial results in H1 2021, with revenue growing 12.2% to £1.77bn. However, revenue from Germany experienced a 34% decline due to the country’s transitional regime for online gaming. Almost all of Entain’s net gaming revenue was generated online.
DraftKings, on the other hand, raised its revenue guidance in H1 and recorded significant revenue growth of 282.3% compared to the previous year. The operator also announced its acquisition of Golden Nugget Online Gaming for $1.56bn.
Recently, Jette Nygaard-Andersson was appointed as Entain’s new chief executive, replacing Shay Segev.
