DraftKings merger leaves Kambi out in the cold

Sunday 29th of December 2019

Fantasy sports company DraftKings has announced a three-way deal that will see the company become publicly listed next year and absorb gaming technology firm SBTech. The deal also leaves the Kambi Group, with which DraftKings had renewed its technology partnership in August, out in the cold.

Reports that DraftKings might acquire SBTech first emerged in June, and the news had sent shares its current technology partner Kambi plummeting by about 20 percent. In August, however, the situation stabilized when DraftKings renewed its partnership with Kambi, apparently signalling that it would not acquire Kambi’s rival SBTech and bring the capabilities in-house.

DraftKings’ announcement last week clarified the matter. The three-way deal sees DraftKings acquire Nasdaq-listed Diamond Eagle Acquisition Corporation, which allows it to go public, as well as SBTech. The combined company will have a market cap of US$3.3 billion with more than US$500 million in unrestricted cash after the transaction.

DraftKings CEO Jason Robins stated, “The combination of DraftKings’ leading and trusted brand, deep focus on customer experience, and data science expertise, and SBTech’s highly innovative and proven technology platform creates a vertically-integrated powerhouse. I look forward to building significantly upon our goals of continuing our state-by-state rollout and creating the most entertaining and engaging customer experiences for sports fans globally.”

The merged DraftKings will continue to be led by CEO Jason Robins and will retain DraftKings’ management team. The SBTech management team will be “integrated into the organization,” according to the press release.

For Kambi’s part, CEO Kristian Nylén commented, “Kambi recently signed a renewed deal with DraftKings and, as per that agreement, we will continue to provide the same high levels of product and service that enabled DraftKings to become a leading player across multiple US states. No notice of termination has been given; should that type of information be given, we will inform the market.”

DraftKings’ announcement triggered a 30 percent fall in Kambi’s share prices.