By Sachin Ravikumar and Muvija M
Oct 26 (Reuters) – Betting firm DraftKings walked away from a $22 billion attempt to buy gambling group Entain on Tuesday, becoming the second American bidder this year to try and fail to take control of the British owner of Ladbrokes betting shops.
Neither DraftKings nor Entain explained exactly why the deal talks foundered but said in separate statements that they believed strongly in their individual growth prospects.
“After several discussions with Entain leadership, DraftKings has decided that it will not make a firm offer for Entain at this time,” DraftKings Chief Executive Officer Jason Robins said in a statement.
Under British takeover rules, DraftKings cannot make another bid for Entain for six months unless there is a competing offer.
It had made a 28-pounds-per-share proposal for Entain in cash and stock in September after Entain rejected an earlier 25-pound proposal.
DraftKings shares jumped 5.8% in early trading in New York, while Entain shares were last down more than 6% on the London Stock Exchange, having fallen as much as 12% earlier.
Entain had already rejected a roughly $11 billion takeover approach in January from U.S.
casino operator MGM, also its joint venture partner for U.S. online sportsbook BetMGM.
DraftKings’ pursuit of Entain was complicated by the issue of BetMGM, a rival to DraftKings in the United States.
The boss of MGM had said he would have sought to take control of BetMGM if DraftKings had agreed to buy Entain.
“We are not surprised by this outcome, because we viewed this deal as just too complicated to close from the start,” JPMorgan analyst Joseph Greff said in a note.
Greff noted the “sizable amount” of shares that would have been used by DraftKings to fund the acquisition as another potential complication, besides the BetMGM issue.
Dealmaking in the betting industry has been heating up as the United States opens up to sports betting and companies look to tap into the expertise of companies forged in more developed gambling markets such as Britain.
BetMGM was viewed as a major factor driving DraftKings’ interest in Entain. The U.S.
venture has grown steadily and challenged FanDuel owner Flutter, the No.1 player in the American sports betting and online gaming market.
MGM was not immediately available to comment on Tuesday.
A deal would have also given DraftKings Entain’s Ladbrokes and Coral betting shops, long a feature of Britain’s high streets, as well as the bwin and partypoker Daftar slot online gacor brands.
“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,” DraftKings said.
Entain said its board “strongly believes” in its future prospects and that its management would focus on the company’s growth targets.
Entain has enjoyed a boom in online gambling through the COVID-19 pandemic, with events such as last summer’s European soccer championship and the U.S.
National Football League having helped to revive sports betting. (Reporting by Sachin Ravikumar, Muvija M and Subrat Patnaik in Bengaluru; Editing by Shounak Dasgupta, Steve Orlofsky and Keith Weir)