Yahoo Finance Ladbrokes owner slides as DraftKings walks away from £18bn deal
The owner of Ladbrokes and Coral has been abandoned at the altar for the second time this year after its latest suitor, the US gambling operator DraftKings, withdrew its £18.4bn takeover approach.
Shares in Entain fell 6pc, wiping nearly £800m off its stock market value, as speculators were once again disappointed.
Jason Robins, DraftKings founder and chief executive, decided not to lodge a firm bid “after several discussions” with the board of Entain, whose brands also include Gala bingo and bwin.
Investors in DraftKings, a loss-making company worth almost $40bn, welcomed the decision sending its shares up about 6pc in New York.
DraftKings, at the forefront of the fast-growing US betting market, last month entered into talks with Entain’s board, led by chairman Barry Gibson, over a £28-a-share deal.
The proposed deal was fraught with complexity, however. Entain has a joint venture with MGM Resorts in the US that gives the Las Vegas casino operator the right to block a takeover.
MGM itself made and withdrew an £8bn approach for Entain earlier this year. The shares have performed strongly since, boosted by the growth if its US business as more states legalise sports betting.
Mr Robins has embarked on a charm offensive in recent weeks to convince Entain and his owner shareholders to support the deal, which would be funded in part through the UK firm’s owners accepting DraftKings stock.
He said: “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.”
Entain said the board “strongly believes in [its] future prospects" as an independent company.
“Entain has an outstanding track record of growth having delivered 23 consecutive quarters of double digit online [revenue] growth,” it added.
Roberta Ciaccia, analyst at stock broker Investec, said that DraftKings' announcement was “surprising” because only last week the two parties had agreed to extend a deadline for the US betting company to lodge a firm offer.
“It seemed like DraftKings and MGM were open to finding an agreement on the future of BetMGM,” she said. "For the time being, we rule out that MGM comes back immediately with a counteroffer for Entain, but it remains a distinct long-term possibility.”
Alistair Johnson, analyst at Redburn disagreed. “We suspect DraftKings has abandoned its bid for Entain as it was too complicated to come to an agreement with MGM as to how the BetMGM JV would continue to operate in the event of a deal.
"MGM and Entain have exclusivity agreements in place that mean Entain’s technology – which we think is what DraftKings wanted from the deal – can only be deployed in the US through the joint venture.”
A relaxation of a decades-long ban on sports gambling in the US in 2018 is expected to create the world’s biggest regulated betting market.
Many American firms have looked to the UK for sector expertise. MGM rival Caesars Entertainment has bought William Hill and Bally’s, another US firm, is in the process of buying Gamesys, the company behind JackpotJoy.
Last week, Australia slot machine operator Aristocrat, which has a sizeable presence in the US, agreed to buy London-listed Playtech, which develops gambling software, for £2.7bn.
