Salem Radio Network News Wednesday, December 8, 2021

Business

Ball in MGM’s court after Entain soars on DraftKings bid

By Muvija M

(Reuters) -Entain’s shares jumped to a record high on Wednesday after the gambling group received a $22.4 billion takeover proposal from U.S. rival DraftKings, double a bid it rejected from joint venture partner MGM in January.

Dealmaking is picking up in the online gaming industry as the United States opens up to sports betting and players look to build scale and tap the expertise of foreign companies in more developed markets.

Shares in Britain’s Entain, which owns traditional Ladbrokes and Coral betting shops as well as newer online brands such as bwin and partypoker, rose as much as 11% to hit 25 pounds and top Britain’s benchmark FTSE-100 index.

That compared with the 28 pounds per share cash and stock proposal from DraftKings, a 46.2% premium to Entain’s closing price on Monday, which followed an earlier approach of 25 pounds rejected by Entain.

Analysts said much now would depend on MGM, Entain’s joint venture partner in the United States which said on Tuesday any deal that would leave Entain with a competing U.S. business would require its consent.

JP Morgan analysts said that to win MGM’s approval, DraftKings may have to sell Entain’s 50% stake in the BetMGM joint venture to MGM, leaving DraftKings with Entain’s rest-of-the-world operations, as well as its technology and expertise.

That would mirror the fate of William Hill, another storied British betting brand that was bought by U.S. group Caesars Entertainment in a 2.9 billion pound deal earlier this year, only to be broken up.

Alternatively, DraftKings could seek to merge with BetMGM, giving MGM a stake in the new company. “However, the deal would have to be attractive for MGM to give up its desire to have control,” the JP Morgan analysts said.

BetMGM, which is an online sportsbook for betting on NFL American football and NBA basketball games, controls about 21% of the market versus DraftKings’ 17%, according to RBC Capital Markets. Flutter-owned FanDuel is DraftKings’ top competitor in the United States.

“At first glance, staid UK high street bookmakers are not an obvious fit for a U.S. fantasy sports giant, but it’s Entain’s U.S. sports betting venture with MGM that’s drawn DraftKings eye” Hargreaves Lansdown analyst Nicholas Hyett said.

London-listed companies have been pioneers in gambling technology, developing apps that allow fans to place “in play” bets while they watch a match live.

Entain, whose boss Shay Segev stepped down days after the it snubbed an $11 billion approach from MGM in January, has been on its own expansion path as well, buying up European operators Bet.pt and Enlabs AB.

“The board of Entain will carefully consider the proposal and a further announcement will be made as and when appropriate,” the company, now led by Jette Nygaard-Andersen, said in a statement.

At 0910 GMT, Entain shares were up 6.3% higher at 24 pounds.

(Reporting by Muvija M in BengaluruEditing by Keith Weir and Mark Potter)

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