(Adds detail, background)
Oct 19 (Reuters) - U.S. sports betting firm DraftKings
must decide on Tuesday whether to make a formal offer
for Entain, potentially kicking off a $22-billion-plus
bid battle for the British gambling firm.
Shares in Entain, which hit a record high late September
after it received a $22.4 billion buyout proposal from
DraftKings, have been bolstered by speculation the firm's U.S.
partner MGM could also make an offer.
MGM tried to buy the owner of Ladbrokes and Coral betting
shops earlier this year for $11 billion, which Entain rejected
as too low.
After DraftKings' bid, MGM said any deal that would make
Entain a competitor in the United States would require its
consent.
Dealmaking in the online gaming industry has been picking up
as the United States opens up to sports betting and players look
to build scale and tap the expertise of foreign companies in
more developed markets, such as Britain.
JP Morgan analysts have said DraftKings may have to sell
Entain's 50% stake in the BetMGM joint venture to MGM to get
consent from the U.S. casino operator.
Britain's takeover regulator set Oct. 19 as the deadline for
DraftKings to either make a formal offer or walk away from
Entain, which owns online brands such as bwin and partypoker as
well as traditional betting shops.
Takeover battles for British companies have heated up in
recent years as Brexit and the COVID-19 pandemic hammered
valuations, and a number of deals have received takeover
deadline extensions. A bid battle for supermarket group
Morrisons ended up in an auction.
If DraftKings were unable to make a firm offer but is
reluctant to give up on its attempt altogether, there could be a
situation akin to security firm G4S whose takeover deadline was
extended repeatedly before U.S. group Allied Universal beat out
rival bidder GardaWorld.
(Reporting by Muvija M and Chris Peters
Additional reporting by Pushkala Aripaka in Bengaluru
Editing by Mark Potter)
