Entain extends “put up or shut up” deadline for DraftKings talks

By Robin Harrison

The London Stock Exchange’s Panel on Takeovers and Mergers has granted Entain’s request to extend the deadline by which prospective suitor DraftKings must submit a firm bid for the operator following a £16.40bn (€19.23/$22.40bn) takeover proposal last month.

With the deadline on DraftKings’ 2,800-pence-per Entain-share takeover proposal expiring today (19 October), the Takeover Panel has now given the US giant until 16 November to make a follow up proposal. This so-called “put up or shut up” deadline can be extended further by Entain’s board, with the panel’s consent.

Entain announced in September that DraftKings had put forward its 2,800 pence per share bid, consisting of 630 pence in cash, and the balance payable in new DraftKings Class A common shares. This revised offer followed a 2,500 per share bid - also comprising cash and stock - being rejected.

Since then the Ladbrokes and bwin operator’s board has been in discussions with DraftKings, and believes a number of matters need to be resolved before it takes a position on the offer.

It has set out five key elements, saying more clarity is needed on the value creation for Entain shareholders, including their share of potential synergies, and the terms of any technology supply agreement to BetMGM and MGM Resorts.

The land-based giant - which had a bid for Entain rejected in January 2021 - has already said it intends to fight for control of the 50/50 BetMGM joint venture. As such, Entain’s board said it wants more from DraftKings on the governance rights and value protection for the BetMGM stake.

It is also seeking further clarity on the governance of management structure for the combined entity, and an outline of how the transaction will clear anti-trust and regulatory hurdles.

As with the announcement of DraftKings’ interest, Entain’s board talked up the business’ prospects, which it said were underpinned by leading market conditions, a world-class management team and industry-leading proprietary technology.

“Entain has an outstanding track record of growth having delivered 23 consecutive quarters of double digit online NGR growth, and a three year CAGR of 19% across 2021,” the board said. “Entain’s management remains focused on executing its growth and sustainability strategy and on delivering the opportunities laid out in Entain’s capital markets event on 12 August to treble its total addressable market to c.$160bn.”

These opportunities, it added, include growth in existing markets, a leading position in the US through BetMGM and expansion into newly regulated territories.

This would be complemented by extending into new interactive entertainment experiences such as esports betting - aided by today’s acquisition of Unikrn’s assets - and leveraging its broad product range to cross sell, acquire new customers and retain players.

“As a result the Board is confident in Entain’s ability to continue to deliver material value for its shareholders going forward.”

DraftKings, for its part, said it would continue to engage in discussions with Entain, to conduct more substantive due diligence and analysis on its possible offer. It highlighted the benefits from the combination of the two businesses, specifically expansion into new markets, accelerated product growth and innovation in new and existing verticals.

“DraftKings further notes that while it progresses its discussions with Entain, it also continues to remain very focused on opportunities in the high growth North America market,” it added.

Shares in Entain were trading up 4.05% at 2,210 per share in London this afternoon, while shares in DraftKings were trading down 0.08% at $48.61 per share in New York.

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