Highest Bidder Wins - Or Do They?
The world of gambling is a highly lucrative one and everybody running it is looking for a way to put on the ultimate crown. DraftKings is based in the United States, and it is clear that they want to increase their hold over the market drastically. To show their seriousness in their ordeal, they have made a staggering bid of $20bn for Entain which happens to be one of the giants in the gambling world.
Well, it is not just the number of zeroes following the '2' that makes it such a striking deal. One should also consider the fact that this number is about 30% above the premium value. In simpler terms, the offer ensures about $34.16 for every share. Entain is a massive brand and other brands such as PartyPoker, Ladbrokes, Coral, etc. all come under its banner.
This transaction makes a difference
A big one, if it becomes reality. Given the hugeness of the Entain empire and the staggering amount offered, this bid is an extremely big deal. It is sure to send shockwaves across the whole industry. Such bids also act as a power move which can be seen by DraftKings' plummeting stocks which have increased by 5%. Even Entain has gained upon its stock value by about 17%. If you are not aware of the stock value of Entain, compared to other giants like bet365, Entain has not shown any significant growth. Recent years can be despite the attempts to grow labeled as stagnation.
However, with such a huge deal just around the corner, representatives from both companies have been hard to reach. They have been tight-lipped about the deal and how the proceedings are likely to take place. It has however confirmed from Entain that such an exorbitant bid of $20n has been made by DraftKings but no other details have yet been released. It has been brought to the notice of interested parties that the amount will be paid in combination with stocks and cash. However, the specific arrangements have not yet been disclosed.
This was not the first time
You should also remember that such a huge bid is not being made for the first time. Initially, MGM Resorts had also made a very similar to Entain by offering them $11bn, all in stocks. However, that offer was almost immediately rejected since Entain claimed that the bid amount was way below what they were expecting. Despite this rejection, one should remember that Bet MGM and Entain are already partners in the field. They joined hands to create an iGaming collaboration for US clients. Whether Entain accepts the newer $20bn bid from DraftKings or not, one could be sure that MGM Resorts will have some say in the matter!
What is going to change if Entain accepts the offer? This is a tricky question and there is not a simple answer to that. We can look at some past acquisitions. A significant one was the purchase of MrGreen by William Hill. The transaction that occurred in 2018 was a much smaller one. With a price close to $ 300m, not much has changed from the perspective of players and partners. looks like the "Green Gaming" philosophy has remained.