Sept 22 (Reuters) – Entain’s (ENT.L) shares hit a record high on Wednesday after the British gambling group received a $22.4 billion takeover proposal from U.S. rival DraftKings (DKNG.O) , double a bid it rejected from joint venture partner MGM (MGM.N) in January.
Dealmaking is picking up in the online gaming industry as the United States opens up to sports betting and players look to build scale and tap the expertise of foreign companies in more developed markets.
Shares in Entain, which owns traditional Ladbrokes and Coral betting shops as well as newer online brands such as bwin and partypoker, jumped as much as 11% to hit 25 pounds and top London’s benchmark index (.FTSE) .
That compared with the 28 pounds cash and stock proposal from DraftKings, a 46.2% premium to Entain’s closing price on Monday, which followed an earlier approach of 25 pounds rejected by Entain.
“The board of Entain will carefully consider the proposal,” said Entain, led by new CEO Jette Nygaard-Andersen. DraftKings has until Oct. 19 to either make a firm bid or walk away.
DraftKings’ interest comes weeks after it clinched a $1.6 billion deal to buy U.S. rival Golden Nugget.
As for its bet on Entain, analysts said much would depend on the British company’s U.S. joint venture partner, MGM, which said any deal that would make Entain a competitor in the United States would require its consent.
JP Morgan analysts said that to win MGM’s approval, DraftKings may have to sell Entain’s 50% stake in BetMGM to MGM, leaving DraftKings with Entain’s rest-of-the-world operations, as well as its technology and expertise.
That would mirror the fate of William Hill, another storied British betting brand that U.S. group Caesars (CZR.O) bought in a 2.9 billion pound deal earlier this year, only to then sell its non-U.S. operations. read more Alternatively, DraftKings could seek to merge with BetMGM, giving MGM a stake in the new company. “However, the deal would have to be attractive for MGM to give up its desire to have control,” the JP Morgan analysts said.AMERICAN EXPANSIONBetMGM, an online sportsbook for betting on NFL American football and NBA basketball […]
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