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Monday, November 11, 2024
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UPCOMING EVENTS

DraftKings Makes Surprise Bid for PointsBet

As sports betting continues to proliferate in popularity and frequency, consolidation is beginning to take place across the industry. That is currently playing out in real-time as PointsBet looks to sell off its US assets.

The company, which is based in Australia, had concurred to a binding stock and equity agreement to sell its U.S. sports betting business to Fanatics Betting and Gaming for $150 million. However, that bid has unexpectedly been exceeded.

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Rival company DraftKings has submitted an unsolicited, all-cash bid of $195 million to acquire the U.S. operations, a 30% premium on the offer made by Fanatics. Aside from the offer being more lucrative, DraftKings is arguing that the deal is more beneficial in terms of marketing and requires less of a strenuous pathway to regulatory approval.

“While we continue to focus on operating more efficiently and driving substantial organic revenue growth in the United States, we will also look to prudently capitalize on compelling opportunities at attractive valuations, as is the case with PointsBet’s US business,” DraftKings chief executive officer and co-founder Jason Robins said in a letter. “We believe DraftKings is uniquely positioned to submit this superior proposal due to our scale and corresponding ability to generate meaningful synergies from the acquisition.”

Upon the agreement with Fanatics, PointsBet chief executive officer Sam Swanell communicated to shareholders that its sale was an enticing risk-adjusted value outcome and mitigated risk. Any agreement is subject to approval from shareholders and regulatory jurisdictions, and a vote had been planned for later this month. Just how PointsBet responds to the abrupt offer from DraftKings remains to be seen, but its nature of doing so perturbed management at Fanatics.

“We are skeptical of the DraftKings proposal, which seems like a desperate move to slow down Fanatics and PointsBet from completing the deal,” Fanatics Global chief executive officer Michael Rubin said in a statement. “The purchase price and other financial commitments will total more than $500 million, so they are using the majority of their projected year-end cash just to try to block us.”

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DraftKings believes its bid is most ideal for PointsBet because of its capabilities to enhance the existing product, cultivate mutually beneficial partnerships and utilize emerging technologies.

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