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Sports betting firm DraftKings drops $22.4bn takeover offer for Entain

Sports betting firm DraftKings drops $22.4bn takeover offer for Entain
Sports betting firm DraftKings drops $22.4bn takeover offer for Entain

US-based gambling and fantasy sports giant DraftKings' $22.4 billion (£16.2 billion) takeover of Ladbrokes owner, Entain, has reportedly been dropped after the potential buyer's enthusiasm in a transaction waned.

Entain stated in a stock exchange announcement that DraftKings had chosen not to make a serious bid, more than a month after revealing its interest in an acquisition. According to City takeover laws, the American corporation is not allowed to return with a fresh bid for another six months.

DraftKings is the second US gaming business to show interest in acquiring Entain in less than a year.

In January, the board of Entain, which owns brands such as Coral, Ladbrokes, and Bwin, rejected an £8 billion bid from US JV partner MGM Resorts.

DraftKings' initial proposal valued Entain at twice that amount, but the casino and sports betting company's stock market valuation fell by 7% to £11.6 billion Tuesday afternoon.

While investors liquidated shares when the offered interest faded, Entain emphasized its excellent track record of growth, which included 23 consecutive quarters of growing revenue from gamblers betting with the Isle of Man-based company's brands.

According to analysts at stockbroker, Jefferies, unfavorable investor sentiment toward Entain is expected to be quite short-lived, highlighting the company's trade momentum and potential for expansion in the US through the MGM collaboration.

Since the United States Supreme Court legalized sports betting in 2018, a swarm of British enterprises have launched operations in the United States, leveraging knowledge gained from years of functioning freely in the United Kingdom, where identical regulations were codified in 2007.

However, US regulations have mandated outside enterprises to launch their operations in the region through collaborations with local casino operators who normally hold the restricted number of sports wagering licenses available.

US companies are increasingly attempting to buy out their partners from the UK, with bid interest in Entain preceding Caesars Entertainment's £2.9 billion buyout of William Hill.

Source credit: https://www.theguardian.com/business/2021/oct/26/us-firm-draftkings-abandons-takeover-bid-for-ladbrokes-owner-entain

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Sunil Jha

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