DraftKings $20bn offer for Ladbrokes

A FTSE 100 gaming company’s shares have risen by nearly a fifth following a US rival’s offer.

With its $20 billion buyout bid for Entain, the business behind Ladbrokes and Coral, DraftKings is the newest American rival to enter the British market.

The revelation of the US sports betting firm’s cash and equity bid boosted Entain’s stock by over a fifth, giving it a market value of over £13 billion. Entain had a market valuation of roughly £11 billion before the deal was announced.

Entain rejected an £8.1 billion purchase offer from MGM Resorts, which controls casinos like Las Vegas’ Bellagio, in January. The two businesses still operating BetMGM, an online sports betting partnership, in the US.

The board of Entain confirmed it had received a proposal from DraftKings to buy the company for a mix of shares and cash. It didn’t say how much the plan would cost and said a settlement was not guaranteed.

DraftKings’ offer, which deals with fantasy sports and betting in the US, is reported to be worth roughly £25 per share. The Entain bid plummeted 6.4 percent after it was announced, putting the firm at $22 billion. A $3.3 billion valuation through a merger with a special purpose acquisition company in April last year has roughly sevenfold enhanced DraftKings’ market worth.

An American rival has made a bid for Entain, which controls online betting companies bwin, sportingbet, and PartyPoker as well as over 3,300 high-street bookies. GVC Holdings was formed last year after CEO Kenny Alexander retired.

DraftKings is interested in Entain’s US sports betting business with MGM, according to Hargreaves Lansdown’s Nicholas Hyett. “Entertainment is popular due to significant market growth. As with William Hill, we can expect more mature enterprises to be spun off or sold in the future.”

In September, Caesars Entertainment announced a $3.7 billion (£2.9 billion) plan to buy William Hill.

For the 87-year-old British brand, 1,400 betting shops, and non-US internet activities of William Hill International, 888 Holdings confirmed its £2.2 billion acquisition earlier this month.

Online betting demand increased throughout the 18 months of pandemic lockdowns as bettors were stuck at home and new players arose.

As of 2018, the US Supreme Court legalized sports betting. However, state regulations require them to collaborate with a US corporation that possesses the sports betting licenses.

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