(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 Tuesday that its board received a cash-and-stock offer, confirming an earlier report by CNBC, which said the bid valued the company at $20 billion. There’s no certainty it will lead to a deal, the company said in a statement. The company didn’t reveal the price DraftKings offered.
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 in a separate statement that it would have to give its consent to any deal that results in a competing U.S. operation. 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 as much as 25% in London, the biggest intraday gain since Jan. 4. DraftKings shares fell 3.3% at 12:19 p.m. in New York.
Deal Spree
The U.S. Supreme Court allowed states outside of Nevada to offer sports betting in 2018, a move which sparked a spree of trans-Atlantic betting 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 currently buying Gamesys Group Plc.
The latest move could prompt other offers for Entain, which is appealing due 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 a share, he said, suggesting a total value of about $22.5 billion.
DraftKings, which made its name initially in the daily fantasy sports market, has sought to expand its reach and capitalize as online gambling goes increasingly mainstream. The Golden Nugget deal is intended to help DraftKings attract more casino-type betting customers while also establishing a partnership with Fertitta Entertainment Inc. DraftKings was also involved in talks about a sports-betting deal 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 a number of 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.
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