According to people familiar with the matter, DraftKings (NASDAQ: DKNG) has made a substantial offer to acquire Entain, a UK gambling firm. On Monday, before the news broke, Entain was calculated to be worth around £13.2 billion ($18 billion).
Is DraftKings buying Entain?
According to reports, DraftKings is offering to buy the company in a cash and stock deal. Following the news, which made headlines today, Entain shares bounced over 15% in London.
If DraftKings acquired Entain, it would be a pretty big deal for the company. Entain has an impressive catalog of brands under its belt including Coral, Ladbrokes, and PartyPoker which are very popular in the gambling community.
Earlier this year, hospitality and entertainment giant, MGM Resorts, made a play for Entain. The former offered to acquire Entain for a cool $11 billion which was rejected. Entain said the figure significantly undervalued it. That might be why DraftKings is upping the ante by putting in a solid offer.
DraftKings shareholders appear apprehensive about the amount of money being spent, with DKNG shares plummeting on Tuesday. But, this move could allow DraftKings to dominate the UK gambling market, a sector that is worth around £14.3 billion per year ($19.5 billion). Despite rejecting MGM’s offer to buy it, Entain still has a digital sports betting partnership with it, BetMGM.
In a filing with the London Stock Exchange, Entain’s board stated that it had received an offer from DraftKings but did not give away any details on how much for.
Entertain warned shareholders “take no action at this time” adding:
“A further announcement will be made as and when appropriate.”
Is DraftKings a good investment?
DraftKings has not commented on the news yet but some shareholders are already getting excited about the news. The sports betting company has been very busy expanding. DraftKings announced their intention to launch a marketplace with Autograph, a new NFT startup co-founded by NFL quarterback Tom Brady. This move presents another lucrative opportunity for it by funneling its existing users into the new vertical.
In August, it announced a partnership with Genius Sports and bought Golden Nugget Online Gaming for $1.56 billion to give it access to its 5 million customers and help it reach a new type of audience. This is exactly what the acquisition of Entain would do too but with a UK audience. While acquiring a company just to get its hands on its clients is not a good idea, this expensive buy might help it break the UK market which is a hard one to crack, and put it ahead of its competitors.
If the offer is accepted, DraftKings might just be going global so shareholders should watch this space.
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Content Writer at MyWallSt
Nicole's favorite stock is Etsy because she loves its original and handmade items. She believes people are going to stop buying mass-produced items and start purchasing ‘one of a kind’ fashions and furnishings. In a world of sameness, Etsy has the advantage.