The sports betting industry has been jolted by news that DraftKings Inc. is interested in buying U.K.-based Entain Plc.
CNBC’s David Faber first reported Tuesday that Boston-headquartered DraftKings is making an approximately $20-billion offer to buy Entain, a global sports betting and online gambling firm whose brands include Ladbrokes and partypoker.
Entain is also partners with casino operator MGM Resorts International on BetMGM, a joint venture for sports betting and internet gaming in the U.S. that competes with DraftKings.
“The Board of Entain confirms that it has received a proposal from DraftKings to acquire Entain, the consideration for which would include a combination of DraftKings stock and cash,” Entain said in a statement. “There can be no certainty that any offer will be made for the Company, nor as to the terms on which any such offer may be made.”
Entain then made an additional statement on Tuesday, saying DraftKings had made "an earlier approach" of cash and stock worth about $20 billion that was rejected. Another cash-and-stock proposal was then received on September 19, the company said, which was worth approximately $22.4 billion.
Entain's board says it will "carefully consider" the proposal, but urged shareholders to take no action at the moment. According to the statement, U.K. rules require DraftKings to either announce their intention to make an offer for Entain by the end of the business day on October 19, or say that they don't plan on doing so.
“The Board of Entain strongly believes in the future prospects of the company underpinned by its leading market positions, world class management team and industry-leading technology,” the statement said. “The company has a strong track record of growth and runway for further significant growth as set out in the capital markets day on 12th August, with the potential for its total addressable market to grow by more than three times to $160bn. This includes its leadership position in the rapidly growing North American market through its Joint Venture BetMGM.”
DraftKings makes $20 billion offer for UK sports betting company Entain, sources say https://t.co/GIdGUYfe8G
— CNBC (@CNBC) September 21, 2021
Although it’s not a done deal, if the two companies were to merge it would be a major shake-up for the online sports betting industry. DraftKings and BetMGM are two of the biggest presences in the U.S. market for legal sports betting and internet gambling, the winners and losers in which are still being decided.
There has been a recent round of M&A in the sports-betting world as well, such as DraftKings announcing in August an approximately $1.56-billion deal for Golden Nugget Online Gaming Inc.
DraftKings isn't the first company to kick the tires on Entain either. Entain rejected an approximately $11-billion acquisition offer from its BetMGM partner MGM Resorts earlier this year, arguing it was too low.
A not-so-silent partner
MGM Resorts said Tuesday that it is aware of DraftKings’ “possible offer” for Entain, and suggested that it may have more than just a little say in the matter.
“MGM is Entain's exclusive partner in the U.S. online sports betting and iGaming market through our highly successful 50/50 joint venture BetMGM LLC,” the company said in a press release. “As a consequence, any transaction whereby Entain or its affiliates would own a competing business in the U.S. would require MGM's consent.”
Furthermore, MGM said its priorities include ensuring BetMGM “continues to capture” the opportunity presented by the growing market for online sports betting and gambling in the U.S.
“MGM believes that having control of the BetMGM joint venture is an important step towards achieving its strategic objectives,” it added. “MGM will engage with Entain and DraftKings, as appropriate, to find a solution to the exclusivity arrangements which meets all parties' objectives.”
Entain said its announcements were made without the consent of DraftKings, which has yet to issue any press release of its own about the matter. Also, as of publication, DraftKings had yet to respond to questions from Covers about the news.
