Entain considering £16.4bn offer from DraftKings
By Michele Maatouk
Date: Wednesday 22 Sep 2021
(Sharecast News) - Ladbrokes owner Entain said on Wednesday that DraftKings had made a £16.4bn takeover proposal for the sports betting company.
US-based DraftKings made an initial approach at 2,500p a share which was rejected, Entain said. The group subsequently upped its offer to 2,800p a share, consisting of 630p in cash and the balance in stock. The latest offer represents a 46.2% premium to Entain's closing share price on Monday.
"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," it 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."
Entain said it will "carefully consider" the proposal and a further announcement will be made as and when appropriate.
Earlier this year, Entain rejected an all-share offer from MGM Resorts worth $11bn, arguing that it significantly undervalued the company.
At 0850 BST, the shares were up 8% at 2,441.22p.
Laura Hoy, equity analyst at Hargreaves Lansdown, said: "Ladbrokes and Coral owner Entain finds itself once again the target for acquisition, with this latest offer, after partner MGM's bid was rebuffed back in January.
"While Entain confirmed it would mull the proposal over, there's no guarantee that a deal will go ahead. Even if the offer is accepted, the usual regulatory scrutiny could be further complicated by antitrust concerns due to BetMGM, Entain's joint venture with US Casino operator MGM.
"We suspect that BetMGM is a big part of the reason DraftKings is interested at all, which may mean it will look to offload other parts of the business like the Ladbrokes and Coral physical betting shops down the line, as Caesars Entertainment has done with William Hill's shops.
"But MGM will have a hand in negotiating the terms of the deal, which could ultimately put DraftKings off following through. There's also a chance DraftKing's bold move could push MGM to make another offer for Entain, though we think this possibility is unlikely considering it would require MGM to substantially increase its former offer."
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