The much-publicised tug-of-war between DraftKings and Entain came to an end today when the American firm dramatically walked away from the takeover bid.
The US sports betting firm wanted to acquire the technology, expertise and customer base of brands like Ladbrokes and Coral, while Entain’s casino and gaming brands like Party Casino and Gala Bingo were also believed to be part of the proposed deal.
However, DraftKings have now officially taken their offer off the table – barely a month after launching an informal bid of 2,800 pence per share, or roughly £16 billion. They had initiated a ‘put up or shut up’ deadline of November 16 to Entain, however they have decided to proactively pull the plug on the takeover.
As part of trading rules in the UK, DraftKings will now have a six-month cooling-off period in which they cannot return with a revised bid. However, there is a loophole that allows for Entain to contact DraftKings about the original terms of the deal, and that a takeover could be revisited by that November deadline.
The reason for their reticence has not yet been made public, although it is believed that the presence of MGM Resorts – the third wheel in the arrangement – was enough to scupper the deal. MGM already has a venture capital agreement in place with Entain, and saw their own £8 billion bid for the group rejected in January.
MGM also claimed that they would have to give their expressed permission for any deal to go ahead, which rather complicated matters given that they and DraftKings are direct competitors.
In a statement made to the London Stock Exchange, DraftKings’ Jason Robins outlined his firm’s decision not to make a new offer, revealing that ‘after several discussions with Entain leadership’ their offer was no longer active.
“Based on our vertically-integrated technology stack, best-in-class product and technology capabilities and leading brand, we are highly confident in our ability to maintain a leadership position and achieve our long-term growth plans in the rapidly growing North America market,” Robins said.
What Next for Entain?
The future for Entain remains uncertain. They remain a vulnerable target to takeover from US firms looking to expand in the burgeoning North American market, and it remains to be seen whether other major firms will be eyeing the British brand.
In response to Tuesday’s revelation, the group made a bullish statement of their own, with their board of directors stating that it ‘strongly believes in the future prospects of Entain’ before listing five potential growth areas in 2022 that would take their revenue to more than £100 billion – those include ‘interactive games’ and esports.
And a key shareholder of Entain has revealed that they were not particularly fussed about the deal falling through. Wes McCoy, an investment director at Standard Life, told the Financial Times that ‘there is nothing that Entain doesn’t have that DraftKings has [and] that I want.’
So far, Entain have remained resistant to any hostile takeover and acquisition plans, but how long will that remain the policy?