Rush Street Interactive, fuboTV Again Mentioned as Takeover Targets

Posted on: October 26, 2021, 09:30h. 

Last updated on: October 26, 2021, 11:51h.

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

Shares of fuboTV (NYSE:FUBO) and Rush Street Interactive (NYSE:RSI) popped earlier today as a sell-side analyst highlighted the two companies as potential takeover targets.

fuboTV RSI
An analyst sees Rush Street Interactive as a takeover target. The same goes for fuboTV. (Image: YouTube)

Streaming sports provider fuboTV and iGaming and sportsbook operator Rush Street Interactive got a lift from comments by Oppenheimer analyst Jed Kelly mentioning both names as obvious candidates for would-be suitors. fuboTV stock rallied early in Tuesday’s session before traders sold the name lower, while RSI is modestly higher on the day.

We expect industry consolidation to be a major theme over the next two years, and see RSI and FUBO as the most likely take-out candidates within our coverage universe,” said Kelly in a note to clients.

Kelly’s comments arrive as DraftKings (NASDAQ:DKNG) — a company that’s rapidly built a reputation for dealmaking — indicated it’s dropping its pursuit of Entain Plc (OTC:GMVHY).

DraftKings Potentially Relevant to fuboTV, RSI Investors

To be clear, the Oppenheimer analyst doesn’t overtly say DraftKings will make a move on either fuboTV or RSI.

However, each company could hold allure for DraftKings.

In the case of fuboTV, any potential buyer from the gaming industry would gain access to streaming entertainment technology that’s conducive to growing in-game wagering offerings — a concept that’s viewed as one of the next big things in US sports betting. Earlier this year, speculation surfaced that DraftKings could eventually mull a streaming acquisition.

With RSI, DraftKings would bolster its iGaming exposure, though it remains to be seen if the former would opt for such a deal because it’s in the process of acquiring Golden Nugget Online Gaming (NASDAQ:GNOG) – a direct rival to RSI.

What’s clear is that for DraftKings, either of those companies would come far cheaper than Entain. RSI and fuboTV have market values of $4.66 billion and $4.47 billion, respectively.

Kelly, who rates DraftKings “overweight,” said the operator will continue to be “aggressive with acquisitions,” and that industry consolidation will be a prominent theme for at least another two years.

RSI: Worst Kept Secret

Rush Street Interactive’s status as a takeover candidate, one that’s only grown in the wake of DraftKings agreeing to buy GNOG, is arguably the worst-kept secret in the gaming industry.

In fact, it’s not even a secret at all. Last month, reports surfaced that RSI could be a fit for Walt Disney’s (NYSE:DIS) ESPN unit as it looks to increase its sports wagering exposure. That rumor emerged about a week after it was revealed RSI is one of multiple gaming companies holding takeover discussions with Fanatics.

RSI operates under the BetRivers.com and PlaySugarHouse.com brands and is currently available with either mobile or retail businesses in Colorado, Connecticut, Illinois, Indiana, Iowa, Michigan, New Jersey, New York, Pennsylvania, Virginia, and West Virginia. The company is also operational in Canada and is gaining access to Louisiana, Mississippi, and New Mexico, thanks to an investment in Boom Entertainment.