DraftKings officially called it quits on the process of acquiring Entain today, after publicly acknowledging its interest in the purchase earlier this year. Officials of the company have stated that after a long analysis and discussion with the board of directors of Entain, a decision not to make an offer was made.
The CEO, Co-Founder and Chair of DraftKings Shared His Thoughts
Jason Robins, the CEO co-founder and chair of DraftKings, spoke about the company’s decision to back off. He stated that DraftKings held several discussions with the leadership of Entain, and the conclusion was not to make an offer at this time. He added that DraftKings is confident in its ability to remain a leader in the fast-growing North American market and achieve its long-term growth. The confidence in its success derives from its technological capabilities and best-in-class product, as well as its vertically-integrated technology stack.
The last offer that Entain received from DraftKings was on September 22 for 2,800 pence ($38.56) a share, which is a 46% premium over the closing price of the stock. But the takeover was blocked by BetMGM as it complicated the deal. BetMGM has a 50/50 partnership between MGM Resorts and Entain.
During the summer, MGM was considering making a move on Entain; however, Entain rejected the $11-billion bid because it labeled it as an undervalue of the company in a time when online betting is on the rise. On the other hand, DraftKings’ bid was double at $22 billion. According to previous Entain statements, though, it still may not have been enough.
DraftKings Signed an All-Stock Acquisition of Golden Nugget Online Gaming
DraftKings is adamant about expanding its online sports betting services. During the summer, the company entered into a definitive agreement to purchase Golden Nugget Online Gaming (GNOG), whose value is estimated at $1.56 billion.
Robins commented on the takeover by saying that the acquisition of GNOG will enhance the ability of DraftKings to expand its customer base. That includes new players that will be attracted to the platform as well as the most loyal customers that GNOG already had. Estimates state that the combined customer base will reach five million users.
As the details of the agreement suggest, GNOG shareholders a fixed 0.365 share ratio for New DraftKings Class A common stock for each share of GNOG that the company has. The main stockholder of GNOG, Tilman Fertitta, agreed to hold on to his new DraftKings shares for at least one year after the transaction is closed; he currently holds 46% of GNOG.
However, the takeover hit a snag just one day after it was announced, as the Brodsky & Smith law office stated that it would carry out an investigation into the purchase. The law office claims that GNOG’s board of directors has breached several duties under state and federal regulation, including fiduciary duty.