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DraftKings walks away from potential $22.4 billion offer for Entain

The entrance to DraftKings' headquarters in Boston.Courtesy of DraftKings

(Bloomberg) -- DraftKings Inc. said it won’t make a final bid for Entain Plc, stepping away from a deal valued at about $22.4 billion and halting a merger frenzy in the gambling industry.

DraftKings had offered 2,800 pence a share in cash and stock on Sept. 19 for Entain, owner of British bookmakers Ladbrokes and Coral. The offer represented a 43 percent premium over the stock price at the time and improved on an earlier 2,500-pence bid.

Entain shares fell 12 percent in trading in London on Tuesday, while DraftKing’s shares rose 9 percent in pre-market trading in New York.

In mid-October Entain asked the U.K. merger regulator for an extension to Nov. 16 for DraftKings to make a firm offer, after failing to reach an agreement over a technology licensing agreement and governance structure for BetMGM, an online joint venture between Entain and MGM Resorts International.

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U.K. takeover rules meant DraftKings had to announce its firm intent to make a deal, or be frozen out in making a further offer for six months from the original Oct. 19 deadline.

“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,” Jason Robins, DraftKings chief executive officer, said in a statement Tuesday.

Entain has been in the sights of US gambling companies eager to go global since the US Supreme Court in 2018 allowed sports betting to expand beyond Nevada. 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.

MGM Resorts International tried to buy Entain earlier this year for $11 billion, but walked away rather than raise its bid.

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MGM Resorts had made clear it wanted a seat at the table in the DraftKings-Entain talks, noting that any deal that results in a competing US operation would be subject to its consent.

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