US betting company DraftKings has walked away from its £18.4bn offer for UK rival Entain just a week after a deadline to make a firm bid was extended.
Jason Robins, DraftKings chief executive, said on Tuesday that “after several discussions with Entain leadership” it had decided not to make a formal offer for the business.
“We are highly confident in our ability to maintain a leadership position and achieve our long-term growth plans in the rapidly growing North America market,” he added.
DraftKings made the takeover proposal for Entain, which owns the Ladbrokes and Coral brands, last month. Its offer of 630p per share in cash and the remaining in DraftKings equity valued FTSE-listed Entain at £16.4bn before its £2bn of net debt.
Entain shares fell 10 per cent after DraftKings announced it was not pursuing the deal.
The takeover approach was the latest in a series of tie-ups between experienced UK and European operators and US companies seeking technological expertise to take advantage of the rapid growth of sports betting and online gambling in the US, which has only been permitted since 2018.
Any deal with DraftKings would have required Entain to untangle a complex 50/50 joint venture it operates with US casino group MGM.
BetMGM, created by an agreement between the two companies in 2018, is considered among the UK group’s crown jewels. The venture has taken significant market share in the US and is projecting $1bn in revenue next year with operations in 20 states.
Bill Hornbuckle, MGM chief executive, had indicated the company would want to secure control over BetMGM if DraftKings and Entain made a deal. Entain rejected a £8bn takeover bid from MGM in January.
Wes McCoy, investment director at Standard Life, a key shareholder in Entain, said that despite being impressed by Robins’ entrepreneurship, “there is nothing that Entain doesn’t have that DraftKings has [and] that I want”.
DraftKings is considered one of the most successful businesses to list via a special purpose acquisition company. The Boston-based company has pursued an aggressive expansion strategy, culminating in a bid for Entain that was on par with its own market capitalisation.
Entain and MGM did not immediately respond to a request for comment.
