Investors are urged by PointsBet to accept Fanatics' revised $225 million takeover offer.
PointsBet, an Australian gaming company, released a statement urging investors to vote in favor of Fanatics' revised $225 million takeover offer. This is a 50% increase from Fanatics' initial offer and $40 million more than what rival DraftKings proposed. PointsBet shareholders will vote on the deal on the Friday.
DraftKings was unable to provide a binding offer by 6 p.m. on Tuesday, 27th June 2023. In response, PointsBet's board declared that Fanatics' improved offer is better in terms of both price and ensuring a prompt completion. Earlier Tuesday, PointsBet requested the ASX to suspend trading in its stock due to a significant announcement.
Fanatics returned to the negotiating table on Monday with their enhanced bid of $225 million, which consists of $175 million in cash upon the deal's initial completion and the remaining $50 million after the acquisition is finalized. This would result in a more significant cash distribution to investors.
"The Proposed Distribution of capital is expected to be made over two tranches, with each tranche following shortly after each completion payment. The Company will commence the necessary process to facilitate the Proposed Distribution in the coming months, with the first tranche of approximately A$1.00 per share expected to be paid in mid-September 2023," according to PointsBet.
The Fanatics-PointsBet deal could benefit Fanatics greatly as it aims to be up and running with mobile sports wagering in at least a dozen states by the start of the football season. The operator is currently live in Maryland and Massachusetts, with Ohio and Pennsylvania expected to join soon.
The potential acquisition of PointsBet US by Fanatics would significantly grow the number of states where the operator offers mobile sports betting, and it's noteworthy that PointsBet US has a New York license. New York is the largest state in terms of sports betting handling, fourth-largest in population, and will not be issuing new sports wagering permits anytime soon.
Despite missing out on this specific deal, DraftKings may have gained an advantage by forcing Fanatics to raise their offer. In the past, DraftKings and Fanatics came close to merging, but Fanatics' CEO Michael Rubin ended the negotiations at the last minute. It's rumored that DraftKings' CEO Jason Robins was displeased with this outcome, and DraftKings' bid for PointsBet US may have been a tactic to annoy Fanatics and force it to improve its offer. DraftKings did not comment directly on why they made the proposed offer, but it's possible that it could have played a crucial role in the outcome.
DraftKings did not require PointsBet US for licensing or market share reasons, so their strategy could have had merit. Back in 2021, DraftKings and Fanatics were in advanced talks for a merger, but it fell through when Fanatics' Rubin abandoned negotiations at the last minute. Robins is said to have been unhappy with the collapse of these negotiations, and DraftKings' bid for PointsBet US may have been a tactic to irritate Fanatics and prompt them to raise their offer.
Rumors indicate that DraftKings had no real interest in PointsBet US, as they were not lacking in licensing or market share opportunities, so this strategy could very well prove to be effective.
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Source: www.casino.org
