Fanatics ups bid for Pointsbet’s US business by $113m
Sports merchandising giant Fanatics has increased its takeover offer for Pointsbet’s American business by 50 per cent, as shareholders prepare to vote on Friday.
Sports merchandising giant Fanatics has sweetened its offer to takeover ASX-listed betting shop Pointsbet’s American operations to $US225m ($339m), as rival DraftKings stepped aside.
It is $US75m, or 50 per cent, higher than what the companies originally agreed.
Pointsbet’s board has retained its backing for the now the increased bid, with shareholders set to vote on the deal on Friday.
The company is now estimating a capital distribution of $1.39 to $1.44 a share, which will be made over two tranches, the first of which will be about $1 a share and paid in mid-September.
Chairman Brett Paton said the increased offer followed negotiations between Pointsbet and Fanatics after DraftKings lobbed a non-binding offer on June 16.
“The board unanimously supports the improved proposal from Fanatics Betting and Gaming, which provides a superior price plus certainty,” he said.
“Fanatics Betting and Gaming conducted their diligence process and negotiations in a highly professional manner at all times. The offer to “front end” the additional consideration is an element which we regarded as a welcome and significant benefit to our shareholders.
“Subject to shareholder and regulatory approvals, our US team will have a strong future as part of the Fanatics Betting and Gaming group and PointsBet will build on the opportunities in Australia and Canada underpinned by a strong balance sheet.”
Meanwhile, eleventh-hour rival suitor DraftKings, a US fantasty sports contest company, dropped out of the race after failing to finalise a binding offer.
The Australian reported last month that a sale was imminent and once completed would leave Pointsbet to focus on its Australian and Canadian operations.
PointsBet had turnover of about $US820m in the US in the March quarter. It also currently has about $251m in corporate cash on its balance sheet.
PointsBet appointed Moelis & Co to attempt to accelerate the sale of its US arm, which has been successful in winning market share amid heavy competition in a country where states have been overturning previous bans on online sports wagering after the US Supreme Court struck down the Professional and Amateur Sports Protection Act, in May 2018.
Pointsbet had been seeking to capitalise on the law change, partnering with bricks and mortar casino operators to create a sports betting offering in what is known as a skin agreement. The term skin refers to the unique brands that can operate under each individual gambling licence, and the competition is fierce in what has been called an “explosive” market.
One such partnership Pointsbet struck was with the Riverboat on the Potomac Casino, located in the small seaport town of Colonial Beach on the Maryland and Virginia state border about 100km south of Washington, DC.
Riverboat on the Potomac investor Tony Jones told The Australian last year: “We are truly honoured to have this opportunity to share with you and the world our good fortune to partner with PointsBet, a premier sports-betting operator”.
PointsBet has also used NBA legend Shaquille O’Neal and satirical Instagram account The Inspired Unemployed in advertising.
Several American casino and wagering firms had expressed interest in PointsBet’s operations, which include several sports broadcasting and team sponsorship and marketing deals, but Fanatics has emerged as the most likely suitor in recent days.
Fanatics is best known for selling sports merchandise online – it clinched a 10-year deal with the AFL in March for that league’s official merchandise licence – and its owners have been keen to use its retail reach of 95 million existing customers to break into the lucrative yet competitive US sports gambling market.
It reportedly raised about $US700m from investors late last year for a $US31bn valuation, proceeds from which were set aside for strategic merger and acquisition activity, according to The Wall Street Journal.
Fanatics chief executive Michael Rubin told the WSJ in April that the business was planning to invest $US1bn in its new sports betting division.
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