At this point, DraftKings’ mission is clear – it wants to control the gaming world not only in the US, but globally. It is already discussing the possibility of purchasing Golden Nugget Online Gaming (GNOG) in a deal worth around $1.56 billion, but that pales in comparison to its latest acquisition target. Entain has confirmed that it is considering a bid from DraftKings that would see it sell for around $22 billion, if the deal reaches the finish line.
DraftKings Has Entain in its Sights
It wasn’t too long ago that DraftKings and GNOG announced their arrangement, although that transaction still faces some resistance. While that’s being dissected and picked apart, DraftKings apparently was working on a separate arrangement with a much larger target. Entain confirmed that it is in receipt of a takeover bid from the second-largest sports betting operator in the US. Should this deal be accepted, DraftKings would become a global powerhouse in sports betting and online gaming.
Entain explained that it was approached by DraftKings with an offer recently to purchase the company at $34.12 per share through cash and stock. That offer was seen as too low and was rejected by Entain’s board. DraftKings didn’t stop there and returned with a higher offer of $38.21 a few days ago. The payment would be made through a mix of cash and stocks, with Entain receiving a 46.2% premium on its share price as of the end of the day on September 20. This seemed more appropriate to the board and was accepted by the board. Now, DraftKings will need to finalize its commitment to purchase by October 19. However, according to Entain, that commitment may not arrive.
Entain Acquisition Faces Challenges
Before DraftKings could close on any purchase of Entain, it would have to get around a large brick wall in the form of MGM Resorts International. MGM and Entain are linked through the BetMGM online gaming platform in the US and MGM has previously announced that it was discussing the possibility of buying out its partner to control all of the business. That hasn’t yet found an equitable and satisfactory conclusion, but MGM continues to crunch the numbers to figure out how to proceed. It doesn’t want to pay Entain more money, but isn’t willing to give up its stake in BetMGM, either.
MGM has made it clear that it will stand in the way of any DraftKings/Entain negotiations. It released a statement after the news initially broke, asserting, “MGM is Entain’s exclusive partner in the U.S. online sports betting and iGaming market through our highly successful 50/50 joint venture BetMGM LLC (“BetMGM”). As a consequence, any transaction whereby Entain or its affiliates would own a competing business in the U.S. would require MGM’s consent.”
DraftKings wants to take over the market, but has to get passed FanDuel to become number one. BetMGM has been gaining ground and threatening the positions of both. The takeovers anticipated by DraftKings would almost certainly catapult it to the top; however, MGM is going to make sure that doesn’t happen. It added in its statement that it will “engage with Entain and DraftKings” as needed in order to come up with a solution that “meets all parties’ objectives.”