DraftKings will not be buying international gaming company Entain.
DraftKings issued a statement Tuesday morning saying it would not make a firm takeover offer following “further discussions” with Entain.
The Nasdaq-listed operator said it was confident in its outlook without the deal.
A statement read: “Based on our vertically-integrated technology stack, best-in-class product and technology capabilities and leading brand, we are highly confident in our ability to maintain a leadership position and achieve our long-term growth plans in the rapidly growing North America market.”
How the market reacted to DraftKings/Entain news
DraftKings stock was last up 8% in pre-market trading to $50.40 on the news.
The stock had fallen more than 20% from when the deal was first reported.
Some of that downturn could be attributed to dilution risk. If DraftKings issued vast amounts of new stock to pay Entain shareholders, existing shares would therefore be worth less.
Under UK takeover rules, DraftKings cannot revisit the talks for at least six months.
Getting the $22 billion deal over the line always looked like an uphill battle thanks to Entain’s 50% stake in BetMGM.
Co-owner MGM Resorts had warned it would kill the deal unless it obtained full control over BetMGM, including the Entain technology that powered it.
However, DraftKings was presumably reluctant to hand that control and technology over to a key rival.
MGM could theoretically now make a renewed bid to buy out BetMGM or Entain. The casino giant already tried to buy Entain earlier this year, albeit at around half the price of the DraftKings bid.
Extra time to no avail
Entain and DraftKings were given extra time to hammer out details of their deal earlier in October.
The UK company made clear in that release it was quite happy to continue without a takeover.
Entain added in a statement on Tuesday:“The Board strongly believes in the future prospects of Entain, underpinned by its leading market positions, world-class management team and industry-leading proprietary technology.
“The Board is confident in Entain’s ability to continue to deliver material value for its shareholders going forward.”