Entain, the gambling company behind Ladbrokes and Coral, has received a $20bn takeover approach from DraftKings – the latest swoop by an American rival.

Shares in Entain surged by almost a fifth on the news of the cash and stock offer from the US sports betting firm, making it the biggest riser among FTSE 100 stocks and giving the company a market value of more than £13bn. Before news of the offer emerged, Entain had a market capitalisation of about £11bn.

The offer vindicates the decision by Entain to reject an £8.1bn takeover proposal from its US partner MGM Resorts, which owns casinos including the Bellagio in Las Vegas, in January. The two companies continue to operate an online sports betting partnership in the US called BetMGM.

“The board of Entain confirms that it has received a proposal from DraftKings to acquire Entain, the consideration for which would include a combination of DraftKings stock and cash,” the company said in a statement. It did not disclose the price of the approach, and added there was no certainty a deal would be done.

The offer from DraftKings, which operates fantasy sports and betting in the US, reportedly values the business at about £25 a share and is compromised mostly of shares. Shares in DraftKings fell 6.4% as the news of the Entain offer emerged, valuing the business at about $22bn. DraftKings’ market value has risen almost seven-fold since it was listed at a $3.3bn valuation in April last year through a merger with a special purpose acquisition vehicle.

Entain, which owns a host of online betting brands including bwin, sportingbet and PartyPoker and more than 3,300 high street bookmakers, is the latest British gambling business to be targeted by a US rival as the arrival of legal sports betting state-by-state fuels a flurry of deals. The business was renamed from GVC Holdings last year, after the retirement of its colourful chief executive Kenny Alexander.

“It is Entain’s US sports betting venture with MGM that’s drawn DraftKings’ eye,” said Nicholas Hyett, an equity analyst at Hargreaves Lansdown. “Rapid growth in a market which is itself exploding makes Entain hot stuff. A subsequent spin-off or sale of more mature assets, as we saw with William Hill, would probably follow.”

Last September, the US casino operator Caesars struck a $3.7bn (£2.9bn) to buy William Hill with a focus on rapidly building its US online betting business.

Earlier this month, the British online casino company 888 Holdings confirmed its £2.2bn purchase of William Hill International from Caesars, which did not want to keep the British company’s 87-year-old brand, 1,400 betting shops or non-US online operations.

Demand for online betting has surged during the lengthy pandemic lockdowns over the past 18 months, as punters found themselves stuck at home and new players emerged.

Since the US supreme court legalised sports betting in 2018, a number of British firms have launched operations in the US, but state laws have required them to have a US partner, which tend to hold the sports betting licences.

Flutter, the London-listed parent of gambling brands including Paddy Power and Betfair, merged its American business with the US betting firm FanDuel.

In April, Rupert Murdoch’s Fox launched legal action against Flutter in a dispute over the value of the company’s stake in FanDuel. Fox, which has an option to buy an 18.6% stake in FanDuel, believes it should be allowed to do so at the same lower price Flutter paid last year and not the higher price the company is valued at now, as betting booms.

Flutter is considering listing part of FanDuel, which is the biggest operator in many of the US states that have deregulated sports betting.

Shares in Entain closed up 18.3% at £22.61p per share, a market value of £13.27bn.