Entain has confirmed that it has received a takeover proposal from US betting giant DraftKings.
However it said there was “no certainty” that a firm offer will be made.
As a result, the operator did not reveal the price of the bid, but noted that the final consideration would be made up of both stock and cash.
The announcement followed CBNC reports of DraftKings bidding $20bn (£14.65bn/€17.06bn) for the Ladbrokes, bwin and PartyPoker operator, paying around £25.00 per share.
However sources have suggested to iGB that the actual bid was likely to be higher.
Under the City Code on Mergers, DraftKings now has until 19 October to submit a firm offer.
Earlier this year, Entain was the subject of a rejected $11bn bid from MGM Resorts International, its joint venture partner for the US-facing BetMGM betting and igaming business. Entain at the time said the bid undervalued its business, and MGM opted against making a higher offer.
Harry Barnick, senior analyst at Third Bridge, said the deal is likely to be one step in a wave of further consolidation in the market, with more high-profile deals set to follow.
“Draftkings’ audacious bid indicates it’s willingness to go head-to-head with Flutter-owned FanDuel,” he said.
“As shareholder’s mull over the deal, three key questions remain. What will happen to the MGM partnership under DraftKings ownership? Could we see a counter offer lead to a bidding war?
“Then with the wave of consolidation we are seeing in the market, including 888’s recent acquisition of William Hill’s international assets, investors’ will simply be wondering: which company could be targeted next next?“
MGM has since revealed that it has no intention of selling its stake in BetMGM.
In the first half of the year, Entain saw its H1 2021 revenue grow 12.2% to £1.77bn (€2.09bn/$2.45bn), and profit more than double. However, it did see a 34% drop in revenue from Germany due to the country’s transition regime for online gaming.
Almost all of Entain’s net gaming revenue – at £1.59bn, up 28.4% from 2020 – was made online. After VAT, this total was £1.56bn.
DraftKings, meanwhile, raised its revenue guidance in H1 after recording half-year revenue of $609.8m, up 282.3% from 2020. Soon after publishing its H1 results, the operator announced a deal to acquire 100% of Golden Nugget Online Gaming (GNOG) from Fertitta Entertainment, Inc in a $1.56bn all-stock deal.
The combined group is therefore likely to bring in annual revenue in excess of $6bn.
This year also saw Entain appoint Jette Nygaard-Andersson as its new chief executive, replacing Shay Segev.
