Fanatics Lifts Offer For PointsBet US, Topping DraftKings

Investors of PointsBet (OTC: PBTHF) have been asked to vote in favor of Fanatics’ amended bid of $225 million for the company’s US operations in what could be the last act in the struggle for ownership.

PointsBet has requested that the Australian Securities Exchange (ASX) suspend trading in its stock in preparation for a major news announcement. The news they announced was Fanatics’ increased offer for their US sector. The amended offer was 50% higher than Fanatics’ original bid, and $40 million more than DraftKings’ (NASDAQ: DKNG) bid. PointsBet’s board of directors has unanimously recommended to investors that they accept the transaction with Fanatics. PointsBet shareholders will vote on the deal on Friday June 27th, 2023.

Fanatics, PointsBet US Moving Forward

On Monday, PointsBet revealed that privately held Fanatics had returned to the negotiating table to make a higher counterbid of $225 million. This bid is split into two parts: $175 million in cash payment upon sign-off, and the remaining $50 million upon completion of the acquisition. As a result of Fanatics’ increased bid, PointsBet is expected to make a larger distribution of capital to shareholders. The two payments are predicted to be made over two instalments, with the first one of approximately A$1.00 per share expected to be paid by the middle of September 2023. If the acquisition is finalized swiftly, this could then give Fanatics the capacity to introduce mobile sports betting services in at least twelve states in time for the start of the football season.

Fanatics’ potential acquisition of PointsBet US could mean a major expansion of their mobile sports betting presence across the US. Its existing presence is already live in Maryland and Massachusetts, with Ohio and Pennsylvania set to join soon. Of particular note is PointsBet US’ New York license, giving Fanatics an advantage in the market. New York is the largest state in terms of sports betting handle, fourth-largest by population, and is not currently granting more permits for sports wagering. While the acquisition bid was unsuccessful, it is clear how this would have been a potential win for Fanatics.

DraftKings Lost, but May Have Won

PointsBet declared that DraftKings never provided a binding offer for its US operations, and while this barred DraftKings from earning the deal, it may have still won by obliging Fanatics to up its bid. This maneuver is quite frequent in mergers and acquisitions dealing with every sector. The anticipation may hold value, due to the fact that almost two years ago, DraftKings and Fanatics almost concluded a merger. However, Fanatics CEO Michael Rubin unfortunately crossed out the talks. It is believed that Jason Robins, DraftKings CEO, was displeased with the failure of these negotiations, and his company’s bid for PointsBet US was just a plan to vex Fanatics and necessitate it to heighten its offer. DraftKings didn’t provide a direct comment concerning this point. In any case, the idea may not just be conjecture, because the company didn’t need PointsBet US for licensure or market share concerns.