DraftKings courts UK's Entain as U.S. sports betting spurs deals

U.S. fantasy sports betting company DraftKings has approached UK-listed Entain with a potential offer to buy the British gambling firm in a deal that one media report said could be valued at $20 billion. London-listed Entain's shares closed up 18% as the companies confirmed the approach, which will give the U.S. firm access to Ladbrokes Poker and bwin online betting brands.

U.S. fantasy sports betting company DraftKings has approached UK-listed Entain with a potential offer to buy the British gambling firm in a deal that one media report said could be valued at $20 billion.

London-listed Entain's shares closed up 18% as the companies confirmed the approach, which will give the U.S. firm access to Ladbrokes Poker and bwin online betting brands. Shares of DraftKings fell more than 5%. DraftKings has proposed roughly 2,500 pence per share, according to CNBC's David Faber, representing a premium of about 30% as of Entain's Monday close. The deal will be largely in DraftKings stock along with a cash component, Faber added. (https://bit.ly/3hOgEBx)

The deal frenzy comes when U.S.-based companies are looking to expand overseas and tap the expertise of London-based firms as the United States opens up to sports betting. In a transatlantic deal, Caesars Entertainment acquired Britain's William Hill, a traditional rival to Entain's Ladbrokes brand, in a 2.9 billion pound transaction earlier this year. Caesars is selling the non-U.S. assets of William Hill.

Demand for online betting also boomed during the pandemic as customers took to playing from home when casinos and betting shops were off-limits. Entain, which also owns brands such as Coral, PartyPoker and Sportingbet, had in January rejected an $11 billion offer from U.S.-based MGM Resorts International, saying it undervalued the company.

Entain and MGM already have a joint venture called BetMGM, an online sportsbook for betting on NFL and NBA games, which controls about 21% of the market versus DraftKings' 17%, according to RBC Capital Markets. Any deal in which Entain will own a competing business in the United States will require MGM's consent, the company said, responding to DraftKings approach.

Analysts also expect MGM to return with a new bid as it has accumulated more cash since its multi-billion-dollar offer. DraftKings, which allows users to enter daily and weekly fantasy sports-related contests, confirmed it had approached Entain but did not provide any additional detail.

Entain said DraftKings has until Oct. 19 to make a firm offer for the company.