DraftKings walks away from $22.4bn offer for Entain
Jason Robins “highly confident” of being able to maintain a leadership position in the US despite failed swoop for BetMGM joint venture partner
DraftKings has abandoned its pursuit of Entain and withdrawn its previous $22.4bn offer for the FTSE 100 operator.
In a statement, CEO Jason Robins confirmed DraftKings had held “several” discussions with Entain following its informal offer for the business in September, but has decided not to make a firm offer for the business.
“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 explained.
Following the announcement, DraftKings is prohibited from making a subsequent offer for Entain for a minimum of six months, according to the UK code on takeovers and mergers.
DraftKings can however return within this period if it has the agreement of Entain’s board of directors to do so, or where the City Takeover Panel deems that there has been a material change in circumstances.
In addition, DraftKings can make a firm offer within the six-month exclusion period if Entain confirms a “whitewash” proposal or if Entain itself makes a bid to acquire DraftKings via a reverse takeover.
DraftKings was given a deadline of November 15 by Entain to ‘put up or shut up’, with Entain highlighting a number of matters which had not been “satisfactorily” resolved by DraftKings in its initial proposal.
“These matters are significant and include a clarification from DraftKings about the total value creation for Entain shareholders, including a share of any potential synergies resulting from the deal,” Entain said last week.
A central issue in the takeover negotiations was further clarification over the future of BetMGM, which has been the source of much speculation and a central sticking point since DraftKings’ interest became public.
The speed at which DraftKings has walked away from negotiations would suggest the firm was unable to address these concerns.
Issuing a statement to the London Stock Exchange, Entain said: “Entain’s management remains focused on executing its growth and sustainability strategy and on delivering the opportunities laid out in Entain’s capital markets event on 12 August to treble its total addressable market to circa $160bn.
“As a result, the board is confident in Entain’s ability to continue to deliver material value for its shareholders going forward.”
Earlier this month, Entain’s US JV partner, MGM Resorts, issued an ultimatum to Entain, suggesting the future of the relationship between the two companies would be in doubt if Entain succumbed to the multi-billion-dollar deal.
MGM itself bid $11bn for Entain in early January but the offer was rejected.
In early trading on Nasdaq, DraftKings shares were up nearly 7%, while London-listed Entain went in the opposite direction as its stock tumbled more than 11%.