The Entain (LSE:ENT) share price erupted this week after receiving a takeover bid from a competitor. The stock soared as much as 29%, pushing its 12-month performance to just over 160%.
The Entain share price versus a buyout
On Tuesday, CNBC reported that US firm DraftKings had made a $20bn offer to acquire the UK sports betting firm Entain. The acquisition would be performed using a mixture of stocks and cash and translated into a share price of 2,500p. Comparing this to Entain’s opening share price at the start of the week shows a 25% premium.
Despite the elevated price, management rejected the offer. Since then, DraftKings has subsequently placed a new bid at 2,800p per share. This puts the premium at just over 40%. Following this renewed offer, the management team has said it will “carefully consider the proposal” and recommended that shareholders take “no action at this time”.
Suppose this renewed bid is accepted? In that case, the Entain share price could be set to surge as it’s currently trading 21% under the proposed buyout price. However, it remains entirely possible that this deal fails to come to anything. Even if management and shareholders approve, regulators may not.
Furthermore, there is an added level of complexity surrounding Entain’s US-based online betting platform BetMGM. This platform was created in partnership with MGM. And consequently, the firm requires its consent for DraftKings to acquire any US-based assets.
Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.