Entain considers $22.4 billion DraftKings offer after rejecting first approach

Shares in Entain rose again on Wednesday after the gambling industry giant's board said it would "carefully consider" a $22.4 billion (approx £16.4bn) takeover bid from leading US gambling operator DraftKings.

Reports on Tuesday had claimed DraftKings had made a $20bn offer for the parent company of Ladbrokes and Coral, and late that evening Entain revealed it had rejected an approach from DraftKings at that price.

However, Entain said a further proposal was received on Sunday under which DraftKings would offer 2,800p per Entain share, consisting of 630p in cash and the balance payable in shares.

In a statement released on Tuesday night, Entain said: "The board of Entain will carefully consider the proposal and a further announcement will be made as and when appropriate. Shareholders are urged to take no action at this time."

Shares in Entain spiked following the reports on Tuesday, ending the day 18 per cent higher at 2,261p, and rose again on Wednesday, closing more than five per cent up at 2,377p.

Under City rules DraftKings has until 5pm on October 19 to announce whether it intends to make an offer for Entain.

Entain's share price had already been on an upwards trajectory due to speculation that US casino giant MGM Resorts International, its partner in US joint venture BetMGM, was preparing a bid, Entain having rejected an offer of $11 billion (£7.9bn) from it earlier this year.

BetMGM has established itself as the number two operator in the US's fast-growing sports betting and iGaming market, in which DraftKings and FanDuel – the last-named a stablemate of Paddy Power and Sky Bet under the Flutter Entertainment banner – are among its main rivals.

Entain's board 'strongly believes' in its prospects

Entain's statement added: "The board of Entain strongly believes in the future prospects of the company underpinned by its leading market positions, world class management team and industry-leading technology.

"The company has a strong track record of growth and runway for further significant growth . . . with the potential for its total addressable market to grow by more than three times to $160bn. This includes its leadership position in the rapidly growing North American market through its joint venture BetMGM."

MGM has warned that any deal involving Entain would require its consent.

Gavin Kelleher, gaming and leisure analyst for stockbrokers Goodbody, said DraftKings' offer was "a very attractive proposal for Entain shareholders" but added that it was complicated by MGM's position.

He added: "The question now turns to whether MGM will counter with its own proposal."

In other industry news on Wednesday, Flutter revealed it had settled a legal dispute with the state of Kentucky with a $300 million payment.

The payment stems from a fine first imposed in 2010 and relates to the PokerStars online platform before its purchase by the Stars Group, which in turn merged with Flutter last year

Flutter had been fighting a Kentucky Supreme Court judgement which had lifted the amount of the damages claim against it to $1.3bn.

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