DraftKings withdraws Entain acquisition bid after month of negotiations
DraftKings has confirmed that it will not pursue a takeover of UK betting and gaming group Entain, putting an end to over a month of speculation and negotiation surrounding the potential merger.
Despite this confirmation, DraftKings retains the right to disregard its statement should it come to further agreement with the board of Entain, if a third party makes a firm bid for the FTSE100 company or if the Ladbrokes and Coral operator announces a ‘whitewash’ proposal or reverse takeover.
“After several discussions with Entain leadership, DraftKings has decided that it will not make a firm offer for Entain at this time,” said Jason Robins, CEO and Co-Founder of DraftKings and Chairman of the Board.
“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.”
Responding to the announcement, Entain maintained confidence in its ability to maintain growth and deliver value for its shareholders, while achieving its strategy of “delivering the opportunities set out in Entain’s capital markets event on 12 August” – with the goal of trebling its total addressable market to $160 billion.
The opportunities underscored by the company include establishing leadership in the North American market via its BetMGM subsidiary – operated in cooperation with MGM Resorts – expanding in current and emerging regulated markets, extending its interactive entertainment experience such as esports betting offerings and increasing customer acquisition and loyalty while reducing acquisition costs.
Entain detailed: “The Board strongly believes in the future prospects of Entain, underpinned by its leading market positions, world class management team and industry-leading proprietary technology.
“Entain has an outstanding track record of growth having delivered 23 consecutive quarters of double digit online NGR growth, representing a 3 year CAGR of 19% across 2021.”
DraftKings’ $20 billion bid for Entain was first confirmed by the US Nasdaq-listed company on 21 September, under the terms of a proposal which would see a merger of the two company’s stock and cash.
However, Entain stated that a number of matters relating to the deal required further clarification, including total value creation for Entain shareholders, governance and management composition of the prospective combined entity and deliverability of such a transaction, including antitrust and regulatory clearances.
Most significantly, the status of BetMGM presented a major thorn in the side of a potential buyout, as a potential new owner of Entain would not be able to operate the product without the permission of MGM Resorts.
In order to provide more time for these issues to be addressed and clarified, the deadline for DraftKings to make a firm intention to purchase Entain was pushed back to 16 November 2021.