Entain hits record high on $22 billion DraftKings offer

(Reuters) -Entain’s shares jumped 10% to a record high on Wednesday after the gambling firm announced a $22.4 billion takeover proposal from U.S.-based DraftKings, which was double a bid it rejected from MGM earlier this year.

The British group’s shares hit 24.9 pounds after the opening bell on UK’s blue-chip index, compared with the 28 pounds per share proposed by DraftKings – a 46.2% premium to Entain’s closing price on Monday.

Markets have also been pricing in the prospects of another bid from casino group MGM, with which Entain has a joint venture in the United States. Entain rejected an $11 billion approach from MGM in January.

By 0745 GMT, Entain’s shares were 8% higher at 24.4 pounds.

Dealmaking is picking up in online gaming as the United States opens up to sports betting and players look to build scale as well as tap the expertise of foreign companies that have been operating in the market for longer.

Caesars Entertainment bought Britain’s William Hill in a 2.9 billion pound deal earlier this year.

JP Morgan analysts said DraftKings’ offer for Entain would have to be attractive for MGM to give up its desire to control its joint venture with Entain, BetMGM, which is expected to turn profitable in 2023.

MGM said on Tuesday any deal that would leave Entain with a competing business in the United States would require MGM’s consent.

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