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DraftKings walks away from £18.4bn offer for UK rival Entain

US betting company DraftKings has walked away from its £18.4bn offer for UK rival Entain just a week after a deadline to make a firm bid was extended.

Jason Robins, DraftKings chief executive, said on Tuesday that “after several discussions with Entain leadership” it had decided not to make a formal offer for the business.

“We are highly confident in our ability to maintain a leadership position and achieve our long-term growth plans in the rapidly growing North America market,” he added.

In response, Entain’s board said in a statement that it “strongly believes in the future prospects of Entain” and listed five areas that it said would treble its total addressable market to $160bn, including growth in esports and interactive games.

DraftKings made the takeover proposal for Entain, which owns the Ladbrokes and Coral brands, last month. Its offer of 630p a share in cash and the remainder in DraftKings shares valued FTSE-listed Entain at £16.4bn before its £2bn of net debt.

The announcement that DraftKings would not pursue a deal came as a surprise to analysts as the two companies had agreed last week to extend a “put up or shut up” deadline until November 16. Roberta Caccia, an analyst at Investec, described it as “an abrupt interruption of talks”.

A source with knowledge of the negotiations said the two companies’ boards had failed to agree on the potential value of the equity on offer.

Entain shares fell 10 per cent on the news before paring some of their losses to sit about 6 per cent lower in afternoon trade.

The takeover approach was the latest in a series of tie-ups between experienced UK and European operators and US companies seeking technological expertise to take advantage of the rapid growth of sports betting and online gambling in the US, which has only been permitted since 2018.

Any deal with DraftKings would have required Entain to untangle a complex 50-50 joint venture it operates with US casino group MGM.

BetMGM, created in 2018, is considered among the UK group’s crown jewels. The venture has taken significant market share in the US and is projecting $1bn in revenue next year with operations in 20 states.

Bill Hornbuckle, MGM chief executive, had indicated the company would want to secure control over BetMGM if DraftKings and Entain agreed a deal. Entain rejected an £8bn takeover bid from MGM in January.

Wes McCoy, investment director at Standard Life, a key shareholder in Entain, said that despite being impressed by Robins’ entrepreneurship, “there is nothing that Entain doesn’t have that DraftKings has [and] that I want”.

DraftKings is considered one of the most successful businesses to list via a special purpose acquisition company. The Boston-based group has pursued an aggressive expansion strategy, culminating in a bid for Entain that was on par with its own market capitalisation.

James Wheatcroft, an analyst at Jefferies, said the takeover process had “highlighted the attractiveness of both Entain’s tech platform and its international footprint”.

MGM did not immediately respond to a request for comment.


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