Apparently that wasn’t DraftKings’ best offer

Late Tuesday, after partypoker’s parent company Entain confirmed that DraftKings had put forth an offer to buy the UK-based gambling company, Entain pulled back the curtain further, revealing that it was already considering a second offer from DraftKings.

The original offer, according to CNBC, was for $20 billion. Entain said nothing of the monetary figures yesterday, simply confirming that DraftKings made a bid and that it would be mostly stock, with some cash. Perhaps getting frustrated with all the speculation surrounding what would be yet another gigantic consolidation in the gaming industry, Entain decided to put out another press release to give us the skinny.

DraftKings’ offer was for £25 per share, coming out to about $20 billion. But that’s not all. Entain said it already rejected that offer and that DraftKings came back with yet another, this time for £28 per Entain share, bumping the total value of the offer to $22.4 billion.

Of that, explained Entain, 630 pence per share would be in cash, with the rest payable in new DraftKings Class A common shares. The price represents more than a 46% premium over Entain’s Monday closing price.

In the latest statement, Entain went on to hype itself a bit, saying that it believes it has a strong future and: “The company has a strong track record of growth and runway for further significant growth as
set out in the capital markets day on 12th August, with the potential for its total addressable
market to grow by more than three times to $160bn.”

Must deal with MGM

As we pointed out yesterday, and as Barron’s so succinctly put it, though the prospect of $22.4 billion is likely exciting for Entain shareholders, the company “faces an MGM problem.” This is because Entain and MGM together launched and jointly own the fast-growing BetMGM online sports betting site. BetMGM has already risen to a place of prominence in the US sports betting market and MGM might not want DraftKings to get MGM’s half.

According to Reuters, one option might be for DraftKings to sell Entain’s 50% stake in BetMGM to MGM, leaving it mostly with Entain’s non-US-facing assets. It is entirely possible that this is the play DraftKings intends, as acquiring Entain is an express route to global expansion and it is already a sports betting market leader in the US. Regardless of what happens, MGM will get a say and has already said it will be discussing matters with both parties.

Some analysts have also speculated that MGM could throw its hat into the ring for Entain. It already tried to buy its BetMGM partner for $11 billion early this year, so it would have to more than double that price to make a bid.

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