Ladbrokes owner Entain mulls £16.4bn offer from America’s DraftKings

Ladbrokes owner Entain is mulling a £16.4bn takeover offer from US fantasy sports betting firm DraftKings – after rejecting an earlier £14.6bn approach.

The UK-listed gambling operator had earlier seen its shares soar by 18% after disclosing that it had received an offer from the company, without disclosing financial details.

In a further update issued after the market closed, Entain said it had received an earlier approach at 2,500p a share, which was rejected.

An improved offer at 2,800p was received on Sunday, added the group – which as well as Ladbrokes owns betting shop chain Coral plus online brands including Sportingbet, bwin and Foxy Bingo.

Entain said it would “carefully consider the proposal” and that a further announcement will be made as and when appropriate, urging shareholders to take no action for now, and adding that there could be no certainty that any firm offer will be made.

The offer follows Entain’s rejection of an £8.1bn approach from another American suitor, casino operator MGM Resorts, earlier this year.

It comes as US-based companies are looking to expand overseas and acquire the expertise of London-based firms as America opens up to sports betting.

Earlier this year, Caesars Entertainment snapped up Britain’s William Hill – a traditional rival to Ladbrokes – for £2.9bn but is now selling the non-US assets, including its chain of betting shops in the UK, to online operator 888.

Entain already has a joint US venture with MGM called BetMGM, an online sports platform for betting on American football and basketball games.

MGM said said any deal which could see Entain own a competing business in the US would require its consent.

Analysts also expect MGM to come back with a new bid after walking away from Entain when its offer earlier this year was turned down.

Entain said that under City takeover rules, DraftKings has until 19 October to make a firm offer for the company.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “At first glance, staid UK high street bookmakers are not an obvious fit for a US fantasy sports giant, but it’s Entain’s US sports betting venture with MGM that’s drawn DraftKings eye.

“Rapid growth in market share in a market which is itself exploding makes Entain hot stuff, and a bid from MGM back in January is proof that rivals are prepared to put their hands in their pockets to secure a slice of the action.

“A subsequent spin off/sale of more mature assets, as we saw with William Hill, would probably follow.”