“After several discussions with Entain leadership, DraftKings has decided that it will not make a firm offer for Entain at this time,” said Jason Robins, the chief executive officer of DraftKings.
Last week, the US company had its ‘put up or shut up’ deadlined extended until November 16; it has evidently decided against putting up an official bid – DraftKings had run an offer worth 2,800p a share up the flagpole last month – and is walking away.
Under the City’s code on takeovers, it can’t return with a bid for at least six months unless another bidder emerges for Entain.
The board of Entain took the opportunity to restate its strong belief in the future prospects of Entain, “underpinned by its leading market positions, world-class management team and industry-leading proprietary technology”.
Shares in Entain were down 7.8% at 1,970p in afternoon trading.
While the shares tumbled initially they retained some of the buoyancy that came with the acquisition news back in September, said analyst Laura Hoy at Hargreaves Lansdown.
“That’s because the DraftKings offer confirmed what the market had already been thinking–Entain’s in a strong position to gobble up market share in the developing US market.
“BetMGM, Entain’s joint venture with US-based MGM, was likely a big part of the reason for DraftKings’ interest. But MGM’s position as a third wheel in negotiations may have complicated matters. We suspect this setup will keep any other offers from rolling in unless they come from MGM itself. The US Casino operator already tested those waters and came up empty-handed, so we don’t expect to see much M&A activity in Entain’s future.
“With that said, Entain’s underlying value proposition remains intact and the absence of M&A speculation means investors can focus firmly on the group’s potential as a stand-alone act.”