(Bloomberg) — DraftKings Inc. made a bid to acquire U.K. gambling company Entain Plc, as a surge in sports betting helps drive deal activity across the industry.
Entain said that its board had received a cash-and-stock offer, confirming a story by CNBC, which reported Tuesday that the bid valued the company at $20 billion. Entain closed Monday, before news of the offer, with a value of 11.2 billion pounds ($15.3 billion). There’s no certainty that the approach will lead to a deal, the company said in a statement, which didn’t reveal the bid’s amount.
DraftKings said it made an offer but couldn’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 $11 billion takeover attempt from MGM Resorts International, saying the bid undervalued the company during rising interest in online betting.
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% in London, the biggest gain since Jan. 4. DraftKings shares dropped 5.8% at 2:12 p.m. in New York, while MGM fell less than 1%.
Deal Spree
The U.S. Supreme Court in 2018 allowed states outside of Nevada to offer sports betting, a move that sparked a spree of trans-Atlantic 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 Officer 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 ($38.51) a share, he said, suggesting a total value of about $22.5 billion.
DraftKings, which made its name in the daily fantasy-sports market, has sought to expand and capitalize as online gambling increasingly goes mainstream. The Golden Nugget deal is intended to help DraftKings attract more casino-type betting customers while establishing a partnership with Fertitta Entertainment Inc. DraftKings was also involved in talks about a sports-betting pact with ESPN, Dow Jones reported last month.
The volume of deals involving British companies has already more than doubled to $522 billion this year compared with the same period in 2020, according to data complied by Bloomberg, with several household names drawing overseas buyers. Bids are on the table for grocer Wm Morrison Supermarkets Plc, and defense firms Meggitt Plc and Ultra Electronics Holdings Plc.
(Updates with DraftKings statement in third paragraph)
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