DraftKings Inc (NASDAQ: DKNG) withdrew from a $22 billion deal to acquire Entain plc (LON: ENT) on Tuesday. Its CEO Jason Robins said:
After several discussions with Entain leadership, DraftKings has decided that it will not make a firm offer for Entain at this time.
Neither of the two companies disclosed the specific reasons why talks fell apart. DraftKings shares are up about 5.0% at the time of writing.
Jim Cramer’s remarks on the news
DraftKings had proposed £28 a share to bring the British gambling group under its umbrella. Its offer marked a sharp increase from MGM’s £13 a share that Entain rejected earlier this year.
Both DraftKings and Entain expressed confidence in separate statements on Tuesday that they can continue to grow as distinct companies. Responding to the news on CNBC’s “Squawk on the Street”, Mad Money host Jim Cramer said:
This is a customer acquisition game, and Jason Robins knows how to spend to get customers. Will the casinos have an edge simply because they’ve been set up for betting? I don’t think so.
JPMorgan’s Greff isn’t surprised the deal fell apart
The price action in both stocks indicates it was a surprise for investors. JPMorgan’s Joseph Greff, however, had seen it coming.
We are not surprised by this outcome because we viewed this deal as just too complicated to close from the start.
The British takeover rules disable DraftKings to place another offer to acquire Entain plc for six months unless it is to beat another bidder. Entain plc opened more than 10% down in the stock market this morning.
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