No offer yet: DraftKings gets one more month to bid for UK's Entain

(Reuters) -DraftKings has another month to decide on a formal offer for Entain as the betting firms continue talks on the details of a possible deal, including the U.S. company’s plans for Entain’s BetMGM venture with MGM.

FILE PHOTO: General view inside a Ladbrokes shop in Harpenden, Britain, March 18, 2020. REUTERS/Peter Cziborra/File Photo

Entain said on Tuesday it had sought the extension from Britain’s takeover regulator since the discussions were still ongoing. Talking points with DraftKings also included management composition and antitrust clearances, it added.

DraftKings put forward its $22.4 billion buyout proposal last month after Entain rejected a bid roughly half the size from partner MGM earlier this year. DraftKings had until Oct. 19 to make a firm offer for Entain or walk away.

Shares of London-listed Entain, which hit a record high on DraftKings’ proposal, have been bolstered by speculation that MGM could return with another offer for the owner of Ladbrokes and Coral betting shops.

If DraftKings does make a formal offer for Entain by the new Nov. 16 deadline, it could potentially kick off a $22-billion-plus bid battle for the British gambling firm.

The stock closed 2.2% higher at 2,171 pence on Tuesday.

“The board will require a number of matters to be satisfactorily resolved that are fundamental to the structure and value of the proposal,” Entain said.

MGM has said any deal that would make Entain a competitor in the United States would require its consent.

JPMorgan analysts have said DraftKings may have to sell Entain’s 50% stake in the BetMGM joint venture to MGM to get consent from the U.S. casino operator.

DraftKings said it was continuing its talks with Entain and conducting more due diligence, while also indicating it was open to other deals.

“DraftKings further notes that while it progresses its discussions with Entain, it also continues to remain very focused on opportunities in the high-growth North America market,” the company said.

Dealmaking in the online gaming industry has been picking up 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, such as Britain.

Takeover battles for British companies have also heated up in recent years as Brexit and the COVID-19 pandemic hammered valuations, and a number of deals have received takeover deadline extensions.

A bid battle for supermarket group Morrisons ended up in an auction.

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