DraftKings confirms acquisition proposal made to Entain

DraftKings has allegedly made a $20 billion offer to acquire UK online sports betting company Entain, reported CNBC on Monday. People familiar with the matter told the news source that the offer is largely in DraftKings stock, along with cash, and roughly 2,500 pence per share has been proposed.

Entain’s board has now confirmed a DraftKings proposal on Tuesday in a filing with the London Stock Exchange, but the price of the offer was not stated. “A further announcement will be made as and when appropriate,” noted the company, while urging shareholders to take no actions at this time.

“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,” says the filing. “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.”

On Monday, before news of the proposal, the enterprise value of Entain was about $18 billion. On Tuesday, the company’s shares jumped roughly 17% in London trading, while DraftKings shares retreated about 6% after the news.

As MGM Resorts and Entain have an online sports betting partnership in the US, BetMGM, MGM’s consent would be required for any deal involving the US assets of Entain. Earlier this year, Entain rejected an all-stock offer from MGM, worth $11 billion at the time, a figure considered as significantly undervaluing the company, according to the UK business.

MGM Resorts, following awareness of DraftKings’ possible offer for Entain, released a statement on Tuesday, highlighting its exclusive partnership in the US market. “As a consequence, any transaction whereby Entain or its affiliates would own a competing business in the US would require MGM’s consent,” says the press release.

MGM remarks that its priority is to ensure that BetMGM “continues to capture the growing US online opportunity” and realizing MGM’s vision “of becoming a premier global gaming entertainment company.” In order to achieve this, the company believes that having control of the BetMGM joint venture is “an important step” towards achieving its strategic objectives.

According to the statement, MGM will engage with Entain and DraftKings, as appropriate, “to find a solution” to the exclusivity arrangements which meets all parties’ objectives. PJT Partners is serving as an advisor to MGM Resorts throughout the process.

Entain’s brands include UK poker and gambling companies Coral, Ladbrokes, PartyPoker and bwin. Analysts speculate that MGM might return with a new bid, as it has accumulated more cash since its prior $11 billion offer.

DraftKings has confirmed the proposal sent to Entain, according to Reuters, although no further comments were provided. In addition, the news source says Entain has given DraftKings time until Oct. 19 to make a firm offer for the company.