DraftKings’ Proposal to Entain
One of the leaders in daily fantasy and sports betting, DraftKings has continued to expand its partnerships within the industry with other companies and celebrities. Entain, formerly known as GVC Holdings, is a British Gambling firm that focuses on international sports. Entain also owns other brands such as Bwin, Partypoker, Coral, Ladbrokes, and many other companies in the gaming and casino industry.
DraftKings Bid to Takeover Entain
If the deal goes through, this will be massive for DraftKings for the sports betting, casino, online poker, and the fantasy sports industry. Pokerparty is one of the world’s most renowned online poker sites in the world and is the top 10 operator in the industry according to PokerScout.
DraftKings will have some experts within the company after working with Michael Jordan and also acquiring Golden Nugget Casino. The demand for online betting and other forms of wagering spiked during the pandemic.
In the structured deal, DraftKings made an offer that is valued at $22.4 billion. In the proposal, DraftKings will be taking over the cash and stock takeover of Entain. The bid was reported by David Faber of CNBC and was later verified by both companies.
Entain had another notable offer from another top leading company in the sports betting industry, but the offer was rejected. USA-based MGM Resorts International initially offered $11 billion back in January.
Analysts believed that MGM would eventually return with a better offer in the coming months, but DraftKings offer is a little more than double. This can be seen as defensive play as Entain was extremely undervalued a year ago.
Hershey in a Saturday note stated,”DraftKings might really be after Entain’s technology underpinning the BetMGM offering, which may fall outside the scope of MGM’s blocking rights… In such an outcome, DraftKings would put MGM in a difficult position of needing a new tech stack, which hypothetically could result in MGM making an acquisition of their own.”
Potential Questions in regards to DraftKings and Entain’s Future
Entain rejected DraftKings’ initial offer of 2,500p, and the company followed up with 2,800p. This would put Entain’s company evaluation at $20.5 billion. This represents a 46.2 percent premium for the British firm’s Monday close on September 20.
After the news broke out with the potential deal looming, the stock price shot up 18 percent while DraftKings stock price dipped 7.4 percent during the trading hours and fell by 0.6 percent in the after-market hours.
Investors should not be worried as a dip usually happens when merger and acquisitions news takes place. This potential acquisition would be great for long-term investors as a drop in the stock price would attract more buyers as DraftKings is seeking more innovative approaches to attract more users to its platform.
The question becomes what would happen to BetMGM as the company provides the technology and platform to the joint venture. At this point, it is hard to tell if MGM would hand over the structure it has built over the years to its rival DraftKings.
A deal like this happened before where Caesars Entertainment acquired another British company also known as William Hill. William Hill is a rival of Entain’s Ladbrokes brand. After the US Supreme Court legalized sports betting in the United States, many companies abroad, especially from the United Kingdom, established branches within the United States under one condition. These companies needed to have a partnership with an operator in the United States.
The representatives that work with DraftKings declined to further comment about the potential partnership at this time.
Join our Discord to leave a question or comment regarding this article. We have sports fans talking betting all day — every day! JOIN THE DISCORD NOW AND QUALIFY FOR PRIZES & BETTING SWAG!