With the clock ticking, gambling sites DraftKings and Entain extend the deadline on their $22.4 billion merger deal

October 19, 2021, 5:16 PM UTC

DraftKings and Entain have agreed to extend negotiations over the U.S. sports betting powerhouse’s $22.4 billion offer to buy the British gambling company.

Under U.K. regulations, DraftKings had until today to formalize its offer for Entain or walk away from a deal, starting the clock on a six-month period in which it would be barred from making another attempt.

Instead, Entain and DraftKings convinced the U.K. Takeover Panel, which governs public company M&A deals, to extend the deadline until Nov. 16.

Entain said in a statement that it “has carefully considered” DraftKings’ offer—which represented a 46.2% premium over Entain’s share price before the acquisition talks became public—and that it was still in discussions with the company about the exact terms of the buyout proposal. The company listed a number of issues that remain outstanding, including the exact management and board composition following the merger and an assessment of whether the deal would pass muster with antitrust authorities in the U.S. and the U.K.

The negotiations appear to be especially complicated because they involve a third party: MGM Resorts International, the U.S. casino operator that is Entain’s joint venture partner in online gambling brand BetMGM, and which is a major rival of DraftKings. MGM has said its partnership with Entain stipulates that the British company cannot operate with any other entity in the U.S. without its consent, effectively giving MGM a veto over a deal.

Bill Hornbuckle, MGM’s CEO, has said that he would like to gain more control over BetMGM in return for allowing Entain to tie up with DraftKings and that BetMGM would also need to retain access to Entain’s technology, which is known to be among the best in the industry and has made the company a highly coveted prize for U.S.-based gambling companies.

Entain said that the terms under which it might supply technology to BetMGM and MGM, as well as “governance rights and value protection” for Entain’s stake in BetMGM, remain unresolved. In other words, Entain and MGM have not yet agreed a price by which it would let MGM gain more than 50% of BetMGM it already holds and under which MGM would allow its competitor DraftKings to get ahold of Entain’s tech know-how in the U.S.

Some investors seem to be betting on the fact that Entain and DraftKings agreed to keep talking bodes well for a deal eventually getting done. Entain’s stock, which has been drifting lower over the past month as the days dragged on without any further news on the deal’s status, jumped 4.6% in late-day trading in London.

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