Regulators in the U.K. had set Oct. 19 as a deadline for DraftKings (NASDAQ: DKNG) to either make a formal offer for Entain, or announce that it was walking away. Now that deadline has been extended to Nov. 16.
The Panel on Takeovers and Mergers’ takeover code says the board of the offeree can request an extension based on the status of negotiations and the anticipated timetable for completion. Those decisions are typically announced before the deadline is set to expire, and the offeree must then lay out a new deadline.
This deal is especially complicated because of the involvement of a third gaming giant. Entain is a 50-50 partner alongside MGM Resorts in BetMGM, a U.S. sports and iGambling joint venture. MGM (NYSE: MGM) has been adamant that the specifics of that partnership give it the right to approve any takeover of Entain by a company that owns a competing U.S. business—which DraftKings does.
DraftKings’ interest in Entain (LSE: ENT) is likely two-pronged. First, Entain has a large European presence in sports betting and iGaming through its family of brands, which includes Coral, Ladbrokes, bwin and Party Poker. Second, Entain owns its own technology, which could be a valuable addition to DraftKings’ pre-existing backend system, which is largely derived from its business combination with SBTech.
Entain announced last month that it had received a takeover proposal from DraftKings for roughly $22.6 billion, its second offer from the Boston-based company. This latest proposal was an offer of £2.80 ($3.86) per Entain share, paid in a mix of stock and cash. That offer represented a 46.2% premium to Entain’s closing share price the day before the announcement.
Since that offer Entain’s shares are up about 8.6%. DraftKings shares are down about 11%; MGM’s are up 16%.
DraftKings’ proposal came about nine months after Entain rejected a takeover offer from MGM worth nearly $11 billion. Entain’s technology is what powers BetMGM, so should a deal happen that takes Entain out of BetMGM, MGM would need a new tech partner.