DraftKings, a prominent player in the betting industry, engaged in preliminary discussions during the summer regarding a potential acquisition of 888 Holdings, the owner of William Hill and other European operators. The talks, initiated by DraftKings CEO Jason Robins and involving a group of 888 Holdings shareholders, explored the possibility of an all-stock offer for the struggling company.
Early-Stage Discussions:
The talks occurred in June and July, with industry veterans, including former GVC CEO Kenny Alexander, representing a group of 888 Holdings shareholders known as FS Gaming. The discussions aimed to navigate the feasibility of an acquisition, with advisers present on both sides. However, DraftKings did not make a direct approach to 888 Holdings.
888 Holdings as a Takeover Target:
888 Holdings has been perceived as a takeover target due to challenges such as management issues, compliance concerns, and a recent profit warning, leading to a decline in its share price. The potential acquisition by DraftKings could have provided a strategic solution to address these challenges and enhance the company’s market position.
Valuation and Hurdles:
The acquisition would have valued 888 Holdings at a premium to its market capitalization, reaching £550m during the discussions. However, a significant hurdle presented itself in the form of 888 Holdings’ £1.7bn debt, a result of the acquisition of William Hill’s non-US business from Caesars Entertainment.
Broader Expansion Strategy:
DraftKings’ interest in 888 Holdings aligns with its broader strategy to expand its influence in the betting industry. The company previously made a £22bn bid for Entain in 2021. Despite the discussions, DraftKings reported positive financial results for Q3 2023, showcasing a 57% increase in revenue driven by customer engagement and expansion efforts.
While the talks did not progress beyond the preliminary stage, DraftKings’ exploration of a potential acquisition reflects its commitment to strategic expansion and industry consolidation. The company’s focus on diversification and growth remains evident, with plans for further expansion into various US states and Canada in the coming year.