The Financial Times reports that DraftKings has engaged in discussions on the potential acquisition of 888 Holdings. The company trades in the London Stock Exchange [LSE: 888], and besides its flagship 888 online gambling brand, it owns other properties, including European bookmaker William Hill, SI Sportsbook, and Mr Green Casino.
FT cites two sources, claiming that DraftKings CEO Jason Robins discussed an all-stock offer in June and July with FS Holdings, a group of prominent 888 Holdings shareholders. FS Holdings’ delegations included former GVC (now Entain) CEO Kenny Alexander. The sources claimed the deal would have valued 888 Holdings higher than its market capitalization, which stood at $676.9m during the discussions.
DraftKings did not directly approach 888 Holdings, and all discussions were made through FS Holdings and other shareholders. It is thought that a hurdle to the discussions was £1.7bn (approximately $2.1bn) debt resulting from the company’s purchase of William Hill’s non-US gambling operations from Caesars Entertainment in May 2022. Finally, DraftKings opted not to pursue the deal.
DraftKings has been seeking to expand its reach within the gambling industry in recent years. In 2021, DraftKings bid approximately $26.8 billion for Entain but later gave up on the deal. In June, it also attempted an eleventh-hour, $195 million bid to hijack a deal between PointsBet and Fanatics to purchase the former’s US sports betting business.
888 Holdings has been subject to speculation in recent months due to its below-par share price. Compliance issues, including its £9.4 million fine by the UK Gambling Commission (UKGC) in March 2022 for anti-money laundering and social responsibility failings and management issues, also contributed to a -5.75% fall in the company’s share price year to date.
At the time, 888 Holdings’ chairman, Lord Jonathan Mendelsohn, began a search for a new Chief Executive amid a review of the company’s UKGC license. In July, the company issued a press release stating that Lee Feldman, Kenny Alexander, and Stephen Morana from FS Holdings had presented a proposal to become Chair, CEO, and CFO of 888, respectively. Each of the proposed candidates for senior positions had previously held positions at GVC, now Entain.
The 888 board responded to the proposal by reporting concerns from themselves and the UKGC about the ongoing HMRC investigation into GVC’s activities during the time the individuals proposed to the Board by FS Gaming were in senior leadership positions at the company.
The UKGC expressed its concern regarding the investigation and requested regular updates from 888 concerning any new developments in the circumstances around FS Gaming and its proposal so that it can fully execute its responsibilities as the UK regulator. In the end, the 888 board unanimously voted to reject the proposal.
