Entain’s share price jumps 18 per cent following takeover proposal
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Ladbrokes owner Entain’s shares soared late yesterday afternoon after revealing it had received a takeover inquiry from American betting giant DraftKings.
Entain plc, a FTSE100 company and one of the world’s largest sports-betting and gaming groups, saw its shares surge by 18.04 per cent to 2,261.00 GBX. Before news of the deal broke, Entain’s enterprise value was around £13.2 billion and DraftKings have reportedly made a proposal which includes a combination of cash and stocks.
“A further announcement will be made as and when appropriate,” Entain said in a statement published yesterday. “Shareholders are urged to take no action at this time.”
News of the proposal comes after Entain reported revenue of £1.8bn in the first half of the year, up by 11 per cent compared to 2020. In the UK, online business saw 31 per cent growth for the six month period ending 30 June 2021, as the easing of lockdown restrictions enabled the return of sporting events.
DraftKings is not the UK gaming company’s only suitor. Entain rejected an all-stock offer from MGM Resorts in January for $11bn (£7.95bn), saying the deal significantly undervalued the company.
MGM and Entain have an online betting partnership in the US called BetMGM and the spurned purchaser will be given a say on whether DraftKings’ takeover bid is accepted.
Nicholas Hyett, Equity Analyst at Hargreaves Lansdown, said, “At first glance, staid UK high street bookmakers are not an obvious fit for a US fantasy sports giant, but it’s Entain’s US sports betting venture with MGM that’s drawn DraftKings eye.
“There’s potential for some added complexity in the deal, since it’s not clear how MGM would react to a rival seizing a good chunk of its growing joint venture and the Entain board have rebuffed offers in the past,” he added.
The UK betting company owns a comprehensive portfolio of established brands including Coral, Eurobet, Ladbrokes, Foxy Bingo, Gala, and PartyCasino.
DraftKings will be required to make a firm offer for Entain ahead of a 5pm deadline on October 19.
DraftKings, an online gambling and fantasy sports company, went public via a non-traditional merger in April 2020, with the company’s valuation rising more than sixfold compared to its pre-float valuation of $3.3bn in the intervening months. Share price fell by 5.5 per cent after news of the proposal broke.
Read more: Ladbrokes owner Entain revenue grows 11 per cent during lockdown betting boom