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American sports betting industry leader DraftKings reportedly contemplated a potential takeover of struggling gambling company 888 Holdings, although it has not officially approached 888 with a formal proposal. The consideration of a takeover was revealed in a report by the Financial Times, which stated that DraftKings had engaged in preliminary discussions about the acquisition during the summer.
DraftKings CEO Jason Robins reportedly met with representatives of 888’s major shareholder, FS Gaming, in June and July to explore the possibility of a takeover. The discussions centered around the potential of an all-stock takeover of 888 Holdings. This occurred at a time when 888 Holdings was seeking a new CEO, eventually appointing Per Widerström to the position.
Financial analysts believe that 888 Holdings’ financial struggles and regulatory challenges make it an attractive target for takeover. The company’s declining share price, management and business challenges, as well as regulatory complications and license review, could potentially make it vulnerable to acquisition attempts.
According to the Financial Times, DraftKings could have theoretically acquired 888 Holdings for approximately $676.9 million based on its market capitalization at the time. However, the company’s substantial outstanding net debt, particularly following its acquisition of British gambling giant William Hill earlier in the year, could present a hurdle for any potential acquirer.
DraftKings’ interest in a potential takeover aligns with its overall expansion strategy. This comes as the company posted strong financial results for the third quarter of 2023, with revenues of $790 million. As a result, DraftKings has updated its full-year revenue guidance to be in the range of $4.5-4.8 billion for 2023, reflecting the success of its business strategy and expansion into new jurisdictions.
The company’s recent launch in Maine also enjoyed a successful first weekend of regulated sports betting in the state, further contributing to its positive momentum and growth.