Entain confirms bid approach from DraftKings, shares surge
Ladbrokes owner Entain confirmed on Tuesday that it has received a takeover proposal from DraftKings, made up of a stock and cash offer.
Responding to press speculation, the company said there can be no certainty that any offer will be made nor as to the terms on which any such offer may be made.
"A further announcement will be made as and when appropriate," Entain said. It urged shareholders to take no action at this time.
The statement followed a report by CNBC suggesting that DraftKings was making a $20bn offer for the online sports betting company.
Earlier this year, Entain rejected an all-share offer from MGM Resorts worth $11bn, arguing that it significantly undervalued the company.
At 1530 BST, Entain shares were up 16% at 2,227p.
DraftKings now has until 19 October to either announce a firm intention to make an offer or walk away.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "At first glance, staid UK high street bookmakers are not an obvious fit for a US fantasy sports giant, but it’s Entain’s US sports betting venture with MGM that’s drawn DraftKings eye.
"Rapid growth in a market share in a market which is itself exploding makes Entain hot stuff, and a bid from MGM back in January is proof that rivals are prepared to put their hands in their pockets to secure a slice of the action. A subsequent spin off/sale of more mature assets, as we saw with William Hill, would probably follow.
"However, the fact there are so few details available, not even an offer price, means talks are at an early stage and there can be no certainty whatsoever that a firm offer will eventually be forthcoming, let alone that a deal will complete. There’s potential for some added complexity in the deal, since it’s not clear how MGM would react to a rival seizing a good chunk of its growing joint venture and the Entain board have rebuffed offers in the past. Chickens and eggs spring to mind."