US sports betting and daily fantasy sports operator DraftKings has abandoned its multi-billion takeover offer for its UK rival Entain only a week after the British gambling giant extended the deadline for DraftKings to revise its acquisition bid.
In a statement to the stock market, Entain revealed that DraftKings had walked away from its £16.4-billion bid as it had decided not to make a firm acquisition offer. The US sports betting company abandoned its takeover efforts more than a month after it first declared its interest to acquire its UK gambling rival.
Any deal between Entain and DraftKings would have required the UK gambling operator to end its complex joint venture with MGM Resorts – BetMGM – that was established in 2018. The US-based company has been considered among the crown jewels of Entain, especially considering the fact that it has already managed to take a significant market share in the US.
Under the existing UK takeover rules, DraftKings would not be able to return with a new offer for another 6 months in case it has a change of heart and decides to pursue such a deal once again.
The information was officially confirmed by DraftKings’ chief executive officer Jason Robins. Mr Robins revealed that the US sports betting company has decided not to make a formal takeover bid for the business following several discussions with Entain top executives. He added that his company remains confident that it would be able to keep its leadership position in the growing sports betting market of North America and hit its long-term goals for further growth in the sector even without the acquisition of the British gambling operator.
Entain Previously Extended the Deadline for DraftKings to Make New Acquisition Bid
DraftKings has been the second US gambling operator that expressed an interest in taking over Entain within a year. Back in January 2021, Entain’s Board of Directors rejected an £8.1-billion offer from MGM Resorts, which is currently its joint venture partner in the US.
In September, DraftKings appeared on the scene with an acquisition offer that valued Entain at £16.4 billion before its net debt of £2 billion. As Casino Guardian reported, last week, the UK gambling giant which owns the Ladbrokes and Coral brands, decided to extend the “put-up-or-shut-up” deadline to the US sports betting and DFS operator until November 16th.
However, a knowledge close to the takeover talks has revealed that the boards of the two companies had failed to reach an agreement on the potential value of the equity on offer.
The announcement that DraftKings would not pursue a takeover deal with Entain was found surprising by analysts, especially considering the fact it came only days after the UK gambling giant announced the extension of the offer deadline. Some of them, such as the Investec analyst Roberta Caccia, considered the walk-out decision “an abrupt interruption” of the negotiations.
The acquisition approach was the latest one in a series of merger and takeover deals of US sports betting companies that have been seeking the expertise of British and European operators in the sector. Since the US Supreme Court has eliminated the nationwide ban on sports betting in the country, North American gambling companies have turned to Europe, looking for the knowledge of local gambling companies that have way more experience in the sports betting sector.
Although the proposed deal would not happen, the Board of Directors of Entain said in a statement that the company still strongly believes in its future prospects. It also listed five areas that would make its total market share increase three times, including in interactive games and esports.