Entain Extends the Formal Acquisition Offer Deadline for DraftKings but Requires Clarification on Definitive Issues

The British gambling and sports betting giant Entain plc, formerly known as GVC Holdings, has extended the deadline for a formal acquisition offer to DraftKings, as the gambling group’s investors call for the US suitor to put definitive terms on its £16.4- billion ($22.4-billion) takeover bid.

In an official statement dated October 19th, the company revealed that negotiations with DraftKings are still ongoing, although it required a number of issues that were described by Entain as “fundamental” to be resolved by no later than 5:00 PM on the same day.

The matters that have been described by the company as crucial to the value of the proposal, include total value creation of the shareholders of Entain, management and governance of the prospective combined group, as well as the chances to deliver such a transaction. The status of the already existing US joint venture of Entain with MGM Resorts – the US-facing online sportsbook BetMGM – has also been among the matters requiring further clarification. Previously, MGM Resorts has said that any agreement that would make Entain its rival in the US would require its consent to be finalised.

Now, with the two companies continuing their talks on the details of a possible takeover deal, DraftKings has another month to make a decision on its formal offer for the British gambling group. Yesterday, Entertain revealed that it had sought the extension from the UK takeover regulatory body since the discussions have not been finalised yet.

Fate of Entain’s US Joint Venture BetMGM Remains Unknown, Too

In September 2021, DraftKings unveiled its £16.4- billion takeover proposal for the British gambling group, after Entain had already rejected an acquisition bid from MGM Resorts earlier in 2021.

For the time being, Entain governance remains focused on sticking to its corporate strategy that was presented to the company’s shareholders on August 12th. Under the underlying corporate strategy, the British gambling giant aims to boost its businesses’ addressable market size of more than £115 billion, with the company’s board pursuing the gambling operator’s future prospects. As shared in an update provided by Entain, the company so far has an “outstanding track record of growth”, with the giant having delivered 23 straight quarters of double-digit growth of its online net gaming revenue.

If the US sports betting and daily fantasy sports operator takes advantage of the extension and returns with another offer for Entain before the new November 16th deadline, it could potentially trigger a high-stake battle for the British gambling company that owns the popular Ladbrokes and Coral brands. Furthermore, considering the recent takeover interest MGM Resorts had in Entain and the fact that the two companies are already collaborating through their BetMGM joint venture, analysts have said that DraftKings may be forced to dispose of the 50% stake held in the US sportsbook by Entain in order to get MGM Resorts’ consent to complete the deal.

DraftKings shared that it was still in talks with Entain and conducting more due diligence. The US sports betting and DFS company, however, also said that it was open to other growth opportunities in the flourishing US market.

Heated Dealmaking Process Triggered by Stricter UK Regulations and US Sports Betting Market Liberalisation

The dealmaking process in the online gambling sector has become increasingly aggressive after the US Supreme Court announced its decision to strike off the federal ban on sports betting and make this form of gambling legal.

On one hand, local gambling operators that had no experience in sports betting offering at all started seeking the expertise of foreign companies in more developed sports betting markets, such as the UK.

On the other hand, UK-facing gambling companies have been facing а stricter regulatory regime in the local gambling industry due to the extensive overhaul that has been carried out by the UK Government and competent regulatory bodies, which has encouraged operators to seek other opportunities for growth. Recent takeover battles for British operators have also heated up over the past few years, with Brexit and the consequences of Covid-19 and the lockdowns associated with the pandemic also adding up to the trend.

Olivia Cole

Olivia Cole

Olivia Cole has worked as a journalist for several years now. Over the last couple of years she has been engaged in writing about a number of industries and has developed an interest for the gambling market in the UK.

Daniel Williams
Author: Wanda Peters