DraftKings bids US$22.4B for U.K. gambling company

DraftKings Inc. offered to acquire Entain Plc in a deal valuing the U.K. gambling company at about US$22.4 billion, as a surge in sports betting helps drive deal activity across the industry.

Entain received a cash-andstock offer for 2,800 pence a share on Sept. 19, the company said in a statement Tuesday after the London stock market closed.

The proposal, representing a 46-per-cent premium over Monday's closing share price, includes 630 pence in cash.

Entain also disclosed that it had received an earlier offer from DraftKings of 2,500 pence a share, which the board rejected.

Entain said it would “carefully consider” the latest offer, which may not lead to a deal.

DraftKings confirmed in a separate statement that it made an offer but didn't provide additional details.

An acquisition would dramatically expand DraftKings's emerging gambling empire, coming just over a month after the company agreed to buy Golden Nugget Online Gaming Inc.

Entain, which owns British bookmakers Ladbrokes and Coral, earlier this year rejected an US$11-billion takeover attempt from MGM Resorts International, saying the bid undervalued the company during rising interest in online betting.

(Entain is well-positioned for other offers thanks to) double-digit online growth, online scale, proprietary tech and U.S. upside.

Casino operator MGM, which runs a U.S. joint venture with Entain called BetMGM, said Tuesday that any deal that results in a competing U.S. operation would be subject to its consent.

The company said it would engage with Entain and DraftKings to find a solution.

“MGM's priority is to ensure that BetMGM continues to capture the growing U.S. online opportunity and realizing MGM's vision of becoming a premier global gaming entertainment company,” MGM said.

Entain jumped 18 per cent Tuesday in London after CNBC earlier reported on the offer, the biggest gain since Jan. 4. DraftKings shares dropped about seven per cent at close in New York, while MGM fell nearly two per cent.

The U.S. Supreme Court in 2018 allowed states outside of Nevada to offer sports betting, a move that sparked a spree of transatlantic gambling deals and a land grab for customers.

Casino operator Caesars Entertainment Inc. bought Britain's William Hill in April, Ireland's Flutter Entertainment Plc bought Stars Group Inc. in Canada last year, and Bally's Corp. is in the process of buying Gamesys Group Plc.

The approach by DraftKings is the biggest test yet for Entain chief executive Jette Nygaard-Andersen, who took the reins days after MGM's unsuccessful offer in January.

She has told investors that Entain would grow healthily thanks to improving technology and planned expansions in new markets.

The company is well-positioned for other offers thanks to “double-digit online growth, online scale, proprietary tech and U.S. upside,” Jefferies analyst James Wheatcroft said in a note.

A middle-of-the-pack multiple would imply a fair value for Entain of about 28.20 pounds (US$38.51) a share, he said, suggesting a total value of about US$22.5 billion.