PointsBet in talks with 11th-hour rival US bidder DraftKings

The unsolicited offer comes as PointsBet shareholders prepare to vote on a US sale to sports apparel and fan products business Fanatics.

PointsBet chief executive Sam Swannell last month admitted to The Australian there was still a chance its Australian arm could be part of another transaction. Picture: Stuart McEvoy

Two American billionaires could push the value of PointsBet’s US business past the $300m mark, with the market likely pricing in a bidding war for the asset.

DraftKings chief executive Jason Robins is battling Fanatics billionaire Michael Rubin, with Robins setting off a big increase in PointsBet’s share price on Monday and sparking hopes of a prolonged battle between the pair for the Australian-led US arm.

PointsBet said it will engage in talks with eleventh-hour rival suitor DraftKings on the sale of its US business – an offer that was lobbed late on Friday – in the hope of drumming up a higher offer price for shareholders.

DraftKings’ unsolicited and indicative all-cash offer of $US195m ($283m), comes as PointsBet shareholders prepare to vote on a sale of the operation to sports apparel and fan products business Fanatics.

PointsBet shares surged on the news, trading 13.2 per cent higher at $1.54 in morning deals and ending Monday at $1.65 for an increase of almost 21 per cent.

The Fanatics deal, worth $US150m ($222m), is still backed by PointsBet’s board.

Fanatics is looking to use its huge US sports retail business as the basis of its entry to the country’s betting market married with PointsBet’s existing wagering expertise and market share.

It will need to at least match DraftKings’ proposed bidding price, should that company’s management follow through on a more concrete deal, to stay in the race for PointsBet’s US business.

Any further bids will likely take the price close or even past $300m, with further proposals likely to eventuate within the next week.

“It should be noted that the DraftKings proposal does not constitute a binding offer or commitment on the part of DraftKings to negotiate or execute a definitive agreement and, to this end, there is no guarantee that the DraftKings proposal will result in a binding definitive agreement,” PointsBet said in a letter to shareholders on Monday.

PointsBet will consider whether DraftKings’ proposal, initially lobbed on June 16, can be completed in a timely and certain manner, as well as the amount and timing of capital return to shareholders it would enable.

Much of the proceeds from the Fanatics deal, set for a shareholder vote on June 30, would be returned to shareholders.

PointsBet has said if the Fanatics transaction is completed it intends to distribute about $1.07 to $1.10 per share to shareholders, which represents most of the net sale proceeds and the majority of the cash currently sitting on its cash balance sheet.

It has been a long road already for PointsBet since talks on selling its US business began.

PointsBet had entered into exclusive talks with Betr just before Christmas last year but Betr had been unable to raise the funding for PointsBet’s then rumoured $250m asking price.

Meanwhile, a sale of the US business will see PointsBet’s ASX-listed company left with operations in Australia and Canada.

But PointsBet chief executive Sam Swannell last month admitted to The Australian there was still a chance its Australian arm could be part of another transaction.

The company was confident of its growth prospects as a mainly locally-focused business, with a current Australian market share of around 5 per cent, Mr Swannell added.