Earnings+More - Deal Talk #4
Deal Talk #4Flutter wins the (Fan)duel with FOX, MGM and Entain tensions ramp up, Kindred buyer left hanging +MoreIn this issue:
FanDuel’s IPO glide pathThe big takeaway from the decision by the arbitration tribunal is that the path will soon be cleared for a FanDuel IPO. Clearing the decks: Early in 2023 the arbitration tribunal deciding the dispute between Flutter and FOX over the latter’s stake in FanDuel is set to rule on what, if any, conditions can be attached to a potential listing for FanDuel in the US. Going by the extent to which the findings last week very much fell in Flutter’s favor, it is not expected the tribunal will add any further obstacles.
Patience is a virtue: However, those that E+M spoke to on the matter suggested that an IPO will not be imminent, with market conditions simply not favorable. “You wouldn’t want to IPO right now because the market is dead,” said one source.
Over and above market considerations, FanDuel will also have to determine its strategy from here. “I’m sure they would try and keep control,” said one source, suggesting they would retain control of at least 50.1% of the shares.
** SPONSOR’S MESSAGE** GiG is a leading gaming platform and sportsbook provider for online and land-based operators with digital aspirations. We deliver a full end-to-end solution through our award-winning iGaming and sportsbook solutions. Built for regulated markets and a top-class customer experience, GiG is pioneering the multi-platform era. If you are looking to expand your operations into new, profitable markets, our strategy is the solution. Find out more at sales@gig.com. MGM and Entain seek resolutionThe betting and gaming sector’s own Kramer vs. Kramer over the future of the BetMGM joint venture is set to run for a while yet. A strange Mexican standoff: It may not yet be overt but under the surface it is believed that tensions are building between MGM Resorts and Entain over the future of their relationship. While MGM has made it abundantly clear it would like to own 100% of the business, it has yet to articulate how it would go about obtaining full control.
There’s no other way: According to sources, it is the last factor that has fed the idea that MGM is the only ‘natural’ buyer of Entain. It raises the question why MGM is yet to come back to the table. And the answer is, it’s complicated. To fund any deal, MGM is likely to use a combination of debt and equity and unfortunately there are question marks around both elements right now. Debt: As previously detailed in Deal Talk #1 in relation to the aborted Playtech takeover talks, debt is expensive right now. “The capital markets aren’t there to support a cash bid,” suggested one dealmaker.
Equity: The other problem is share price valuations. Doing a deal during the current turmoil would be difficult anyway without the issue of what is the true valuation for each party.
The lion’s shareRaw meat: The surprise move in recent months was the buyout of LeoVegas, a deal that confounded expectations about MGM’s direction of travel. On the recent earnings call, MGM CEO Bill Hornbuckle said the LeoVegas deal represented an “aggressive expansion in international and online gaming” for his company.
Look busy: Entain, of course, isn’t standing still. It recently raised £1bn to fund its SuperSport buyout/joint venture and “very much sees itself as an acquirer, not an acquiree”, in the words of one advisor.
Eye of the beholderEat the make up: Entain comes with baggage. It has recently made much of its ‘EntainSustain’ CSR efforts and talks of its regulated revenues. But some of this remains ‘regulating’ such as Brazil and German online casino, while in the UK it keeps getting tripped up by historical responsible gaming failures and it is under investigation for AML failures in Australia.
What is the catalyst? The impasse is proving to be long-lived and could last for a while yet. Should Entain’s prospects deteriorate significantly, its shareholders might be more willing to listen to offers. But it is hard to see what would cause such a downturn.
Scandi froidSince May activist investor Corvex has been agitating for Kindred to find a buyer, but according to sources that message might not have yet reached the management. Cold cuts: Ahead of its Q3 earnings, Kindred announced that it had welcomed James Gemmel, a partner at the activist investor Corvex, to the board. Having initially made a foray in May to grab 10%-plus of the company, Corvex has recently upped its stake to 15%.
Hanging on the telephone: The suggestion from sources is that Kindred needs the help. According to the gossip, an approach from a sizable entity about a potential buyout bid effectively failed to get past the receptionist.
The month in transactions
If you liked this post from Earnings+More, why not share it? |
Key phrases
Older messages
Ruling clears FanDuel IPO path
Monday, November 7, 2022
FanDuel IPO implications from arbitration ruling, DraftKings mauled, Mattress Mack cleans up +More
Breaking: Flutter wins Fox fight
Saturday, November 5, 2022
Flutter says it is "vindicated" after arbitration tribunal finds in its favour over valutaion of FanDuel
Earnings Extra: DraftKings shares dip
Friday, November 4, 2022
DraftKings Q3 prompts share price fall, Super Group issues trading update +More
Weekend Edition #71
Friday, November 4, 2022
Penn online losses widen, Bally's quest for profit, analyst takes, sector watch – esports +More
MGM pushes on
Thursday, November 3, 2022
MGM on track with Vegas and online, LeoVegas down, Rush Street's 'unusual' fall, Melco and SJM report Macau declines +More
You Might Also Like
The Fed is breaking the wrong parts of the economy
Friday, April 26, 2024
As policymakers fail to tame inflation, everyday Americans get squeezed
Apple’s playing ball
Friday, April 26, 2024
The iPhone maker is going deeper into live sports, particularly football (or soccer). But it has a long way to go before becoming a destination ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
Speculation continues to swirl over a possible WPP breakup
Friday, April 26, 2024
Sources moot a potential sell-off of individual agency assets as the agency holding group pushes ahead with turnaround plan. April 26, 2024 Speculation continues to swirl over a possible WPP breakup
Investors not buoyed by weather-beaten Boyd
Friday, April 26, 2024
Below-estimate Boyd, Betsson earnings recap, Churchill Downs' derby date, Gambling.com shares watch +More ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
Noncompetes might be dying. What does that mean for college sports?
Friday, April 26, 2024
Plus a new D-III collective, public records lawsuits, and more:
Convincing loyal customers of a competitor
Friday, April 26, 2024
Today's hack When people think about giving advice, their desire to be helpful outweighs their supportive bias Supportive bias makes loyal customers of your competitors defend their current product
👀 The MF Who Ruined Search
Friday, April 26, 2024
I'm finally selling out… 😏 (COURSE LAUNCH)
Diamonds are not forever
Friday, April 26, 2024
Also in today's edition: Tight pockets, still; AI fatigue is here ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
🔍 Short Form Vid Structure & Landing Page Tactics
Friday, April 26, 2024
One tip. One tactic. One transformation.
So, about my last email
Thursday, April 25, 2024
My responses to your concerns