DraftKings CEO lifts the lid on aborted Entain bid

DraftKings CEO Jason Robins has admitted a leak forced the US sports betting giant to show its hand in revealing its interest in Entain, despite DraftKings ultimately deciding against pursuing a formal bid for the FTSE 100 operator.

Speaking during a Q3 analyst call, Robins outlined DraftKings’ stance on M&A, suggesting the Boston-based outfit is “continuously looking at multiple organic and inorganic growth opportunities that are accretive to our shareholders, most of which never come to fruition but offer great learning opportunities for me and the team”.

Addressing Entain specifically, he continued: “The situation was unique, because there was a leak.

“Pursuant to the UK takeover code, it had to be disclosed that we were in discussions even though the discussions were very early. We had the chance to meet with the leadership of Entain in order to explore the merits of the combination.

“Entain has a very impressive team and we have a great deal of respect for the business, however after carefully assessing the potential transaction and weighing various considerations, including our own organic growth plans as well as other deal flow, we decided not to make an offer,” Robins added.

DraftKings’ interest in Entain was declared in September, beginning a furious period of speculation about the FTSE 100-listed operator’s prospects and the future of the BetMGM brand.

However, just 35 days later, DraftKings walked away from talks affirming confidence in its own business, despite Entain offering to extend the deadline for a bid.

“We recognise that we are very fortunate and I’ve worked very hard to get to where we are as a company with a strong balance sheet and a clear path to many years of very high growth in a market with tens of billions of dollars, it’s still unrealised,” Robins explained.

“The bar for changing that trajectory is incredibly high and it would take a lot for us to decide to pursue any large asset with a slower growth profile. At the same time, we felt obligated to look at this deal, but just because we look at something doesn’t mean we will decide to do it,” he added.

Despite choosing to walk away, the DraftKings CEO and co-founder cited the presence of global expansion as one of the three pillars which might determine future M&A activity, the others being product expansion and ways of improving its position in the US market.

The Entain deal, with its exposure to BetMGM and Entain’s global portfolio, fits two of those objectives and Robins admitted global expansion would have been significantly aided if the deal had gone through.

Discussing the priorities for M&A, Robins continued: “We look at these things as opportunities come along. It’s hard to say, ‘hey, I’m going to do this one first, this one second, this third’. It’s kind of like here’s the list but we’ll look at things that come along.

“That could happen soon, it could happen years from now. We don’t have a set timetable. We look at different things as they come about, as long as they fit our long-term strategy.

“This is one [Entain] that we thought potentially could have been a good route for global expansion.”

Robins continued: “As far as why we walked away, I think there are a variety of factors and certainly value is one of them. But there are a variety of factors that led us to feel like it just wasn’t the right thing for us to do at this time.

“Any deal complexity was probably a smaller part of it, although not entirely a meaningful factor.

“Although it was really more about our confidence in our current trajectory in the US or desire to focus on the US, and ultimately the value that we felt we would be shedding by pursuing that asset,” he added.