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DraftKings Stock Surges After Scrapping $22.4 Billion Entain Takeover Bid

DraftKings scrapped plans for a $22.4 billion takeover of British bookmaker Entain Tuesday, sending shares sharply higher in pre-market trading.

DraftKings  (DKNG) - Get Free Report shares surged higher Tuesday after the online sports betting group scrapped its $22.4 billion takeover bid for British bookmaker Entain. 

United U.K. takeover rules, DraftKings had until the close of London trading on November 19 to formalize its $22.4 billion bid for Entain, which operates the Coral and Ladbrokes betting shop and has a U.S. joint venture with MGM Resorts International  (MGM) - Get Free Report, or walk away from the company for at least six months.

MGM, which made an $11 billion approach for Entain earlier this year, has insisted its joint-venture prohibits DraftKings from accessing the London-based group's U.S. operations. 

“After several discussions with Entain leadership, DraftKings has decided that it will not make a firm offer for Entain at this time," said CEO Jason Robins. "Based on our vertically-integrated technology stack, best-in-class product and technology capabilities and leading brand, we are highly confident in our ability to maintain a leadership position and achieve our long-term growth plans in the rapidly growing North America market.”  

DraftKings shares were marked 4.3% higher in early afternoon trading following news of the abandoned bid to change hands at $48.85 each. 

MGM shares were marked 0.3% lower at $48.00 each while Entain's London-listed shares slumped 8.2% to 1,961.5 pence each. 

A takeover of Entain, which boasts a global network of online and retail gaming operations across 18 countries and five continents, would have been a 'transformational' deal for Boston-based DraftKings, said Benchmark analyst Mike Hickey in a recent client note, citing the breadth of its operations and the value of its estimated $5.27 billion in 2021 revenues.

It could also see DraftKings challenge U.K. betting stalwart 888, which agreed to buy the non-U.S. assets of bookmaker William Hill from Caesars Entertainment CZR for around $3 billion.

DraftKings will publish its third quarter earnings on Friday November 5.