BetMGM Hindered Deal with DrafKings, Says Entain CEO Nygaard-Andersen

Posted on: November 11, 2021, 06:00h. 

Last updated on: November 11, 2021, 09:15h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Entain Plc’s (OTC:GMVHY) 50 percent stake in BetMGM was one of the reasons why the company’s courtship with DraftKings (NASDAQ:DKNG) recently fell apart.

Entain takeover
Entain CEO Jette Nygaard-Andersen. She says the company’s BetMGM relationship was a hurdle in the DraftKings takeover talks. (Image: The Guardian)

Entain CEO Jette Nygaard-Andersen made comments to that effect in a Wednesday interview with Reuters — her first public remarks on the matter after her company and suitor DraftKings agreed to end takeover discussions on Oct. 26.

We have always been clear that the joint venture (with MGM) provides exclusivity for both parties for any activities involving sports betting and gaming in the United States,” Nygaard-Andersen told Reuters. “I think that played a role here. But any transaction of this size is complicated.”

MGM Resorts International (NYSE:MGM) is Entain’s partner on the BetMGM venture. The casino giant’s consent was required for the Ladbrokes owner to be acquired by DraftKings, because that combination could have resulted in a competing business in the US.

In September, DraftKings offered more than $20 billion in cash and equity for Entain — a proposal the target rejected. The suitor then floated a $22.4 billion cash and stock bid. But it’s unclear if that became a formal offer prior to the talks falling apart.

BetMGM Was Hurdle From the Start

As soon as DraftKings’ initial offer for Entain was revealed, analysts and investors surmised that BetMGM could complicate matters.

MGM was quick to acknowledge the takeover talks, sounding a congenial tone and indicating it was willing to work with the two parties towards an amicable resolution. However, MGM has long expressed regret that it doesn’t have full control of the iGaming and sports wagering enterprise. It was later rumored that the casino operator was mulling ways to gain that control while DraftKings and Entain were in discussions.

Since the negotiations collapsed, both DraftKings and Entain sought to allay investors’ concerns by expressing confidence in their outlooks as standalone entities. While DraftKings reiterated a commitment to North America following the scrapped courtship of Entain, executives from the Boston-based operator haven’t publicly commented on BetMGM playing a part in the end of those negotiations.

Some analysts speculated DraftKings’ flirtation with Entain would never result in a deal. And in the wake of the talks ending, at least one pondered that the suitor created more questions than it answered with its pursuit of the coral owner.

What Now for Entain

In the Reuters interview, Nygaard-Andersen didn’t comment on whether or not her company is interested in more acquisition talks with another company in the future.

This year, Entain has been a target twice, and remains a standalone company. In January, MGM bid $11.06 billion for its BetMGM partner. But the British bookmaker said the offer wasn’t adequate. Those talks eventually fell apart, and MGM didn’t return to the bargaining table, as many analysts expected would happen.

Today, the prevailing consensus is that while Entain is an attractive target with compelling assets, DraftKings’ $22.4 billion bid likely set the bar so high that the number of credible suitors for Entain is now significantly lower than it was at the start of the year.