DraftKings and Entain Will Continue to Discuss the Acquisition

By Todd Winkler,
Editor at online-gambling.com

Todd Winkler Editor at online-gambling.com

Todd Winkler is another one of our highly professional editors at online-gambling.com. The expert has been part of our team for 6 years, during which time he contributed articles regarding poker, blackjack, and DFS. Winkler is also knowledgeable about New Zealand's legal gambling market.

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Last updated: October 30, 2021

The British company Entain extended by almost a month the deadline granted to the American DraftKings to decide on the formal purchase offer made by the latter for the first time since both organizations continue to talk about the details of a possible agreement which contemplate the plans that the US company would have concerning BetMGM, the joint venture of Entain and MGM.

Through a statement, Entain said that it requested an extension from the British regulator responsible for acquisitions because the talks have not concluded. Among the points to be discussed are the conformation of the management and the antitrust clauses.

In the document, Entain noted that the council will require several issues that are critical to the structure and value of the proposal to be satisfactorily resolved.

Last month DraftKings submitted a purchase offer for $ 22.4 billion, which came after Entain rejected an offer of about half that amount made by its partner MGM earlier this year. In the context of the established legal framework, DraftKings had until October 19 to make a firm offer for Entain or withdraw.

When Is the New Deadline?

The extension granted to DraftKings, whose new deadline is November 16, is part of the British company’s strategy to raise the value of its shares on the London Stock Exchange. Entain stocks hit an all-time high following DraftKings’ proposal and have been underpinned by rumors that MGM could present a new offering.

It is not entirely unreasonable since, after knowing the offer made by DraftKings last month, MGM stepped up to warn that any agreement that makes Entain a competitor in the United States would require its consent.

DraftKings, for its part, confirmed that it continued in talks with Entain and that it was carrying out certain diligences, at the same time that it specified that it was open to other agreements.

DraftKings further notes that while advancing its conversations with Entain, it also remains highly focused on opportunities in the high-growth North American market, as it was stated by the company.

More About the Global Impact

The deal will also have a significant international impact on the global gambling market. While DraftKings versus Entain’s power play is seen as a defensive move aimed at robbing a key competitor of Entain’s tech expertise, it may have expanded DraftKings beyond the United States. DraftKings also informed Flutter, FanDuel’s parent company that, they have set to play on the international market.

Following DraftKings’ suggestion, some Wall Street experts have asked the organizations to hold a combined tripartite agreement that would give MGM Resorts total control over BetMGM. One option, according to Chad Beynon, is where DraftKings could get Enttain businesses outside of the US. And then sign a sale/technology deal with MGM Resorts for BetMGM.

Entain and DraftKings can also acknowledge enlarging the window multiple times to extend the discussions. The same situation played out the previous year when the Canadian security company Gardaworld wanted to take over the British company G4S in a month-long fight. Gardaworld ultimately lost an auction to sell G4S, the globe’s biggest private security company, Allied Universal, which got a tender to buy the UK Company in February.

Enttain’s board of directors may renew the agreement with DraftKings with the approval of the company’s board of directors, according to the Entain.

For its role, DraftKings announced that it would proceed to examine the possible advantages of a potential merger with Enttain, including:

• Development of regulated businesses.
• Acceleration of product development.
• Shift in existing and new industries.