Yahoo Finance Ladbrokes-owner Entain surges after $20 billion DraftKings takeover bid
Shares in Ladbrokes owner Entain have surged 15% after the gambling group received a takeover bid from US fantasy sports firm DraftKings.
Entain confirmed in a statement to the market early on Tuesday afternoon that it had received a preliminary proposal from DraftKings for a mixed cash and stock bid.
“There can be no certainty that any offer will be made for the Company, nor as to the terms on which any such offer may be made,” the company said. “A further announcement will be made as and when appropriate. Shareholders are urged to take no action at this time.”
The brief statement followed a report by CNBC breaking news of the approach. CNBC said the offer was worth $20 billion.
Shares in Entain jumped 15% following the report. Entain was valued at £12.9 billion ($17 billion) prior to the spike.
DraftKings operates one of the most popular fantasy sports apps in the US and went public earlier this year through a SPAC deal in New York. The company is valued at $21 billion, making the Entain approach highly audacious. Shares in DraftKings slumped 6.8%, extending a slide that began on Monday.
The bid comes amid a gambling gold rush in the US. A 2018 Supreme Court ruling overturned federal law banning sports gambling, which opened the way for states to legalize it. Several have done so and US operators are scrambling to win market share. Casino group Caesars bought UK bookmaker William Hill for £2.9 billion last year and rival MGM tried to buy Entain at the start of this year for $11 billion.
Shares in rival gambling brands jumped on news of the Entain bid, as traders reasoned that the buying spree would continue. 888 Holdings rose 6.8% and Paddy Power owner Flutter gained 3.2% in London.
Entain operates bookmaker Ladbrokes, as well as online brands like PartyPoker and Bwin. The company also has a joint venture with MGM in the US.
“It certainly seems an odd proposition given that Entain has a joint venture with MGM Resorts, which could prompt a counter proposal,” said Michael Hewson, chief market analyst at CMC Markets. “However it is clear that DraftKings recognizes Entain’s strong brand in the UK as well as its other 27 markets.”
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