US online sports betting site DraftKings Inc. made a counteroffer of $195 million for PointsBet Holdings’ US subsidiary on Friday, topping the previous amount offered by Fanatics.
DraftKings joined the multiple parties showing interest in acquiring PointsBet US on Friday, offering a buyout sum of $195 million, $45 million more than Fanatics’ competing offer for the company. The proposal comes a month after PointsBet agreed to sell its US division to Fanatics Betting and Gaming.
Both parties agreed on a $150 million buyout agreement; however, the deal is subject to shareholder and regulatory approval. The Board is scheduled to hold a vote on Fanatics’ potential acquisition on June 30.
If approved, the acquisition will allow Fanatics, which is attempting to enter the betting market, to offer sports betting in multiple US states.
In a letter to the management of PointsBet, DraftKings’ CEO Jason Robins disclosed that he thought a deal with DraftKings would receive regulatory approval more quickly than Fanatics. This is because DraftKings already has a gaming license in the states PointsBet operates.
Robins also stated that the PointsBet offer was made to “capitalize on compelling opportunities at attractive valuations.”
“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,” he added.
DraftKings CFO Jason Park also disclosed that acquiring PointsBet would aid the company in offering “interesting new bet types and accelerating our roadmap of bringing in-house more of our mobile sports betting technology.”
In response to DraftKings’ proposal, PointsBet revealed that it was considering the offer and was committed to acting in the best interest of the company’s shareholders. It further encouraged the Board to vote in favor of Fanatics’ offer, at least until a proper review of DraftKings’ proposal is conducted.
“The directors of PointsBet are committed to acting in the best interest of all shareholders and are considering the DraftKings proposal alongside its advisers,” PointsBet said.
“Subject to the outcome of the review being undertaken of the DraftKings proposal, the Board continues to recommend that shareholders vote in favour of the (Fanatics) transaction.”
DraftKings’ last-minute bid has raised some questions amongst experts in the gaming industry as it does little to generate profits for the company in the short run. It will also not supply DraftKings with a larger market share as the company does well in almost every state PointsBet operates in.
Regarding poaching talent, DraftKings already has a lively team in its risk management, trading, and similar departments. According to industry experts, the company is likely attempting to slow down Fanatics’ entry into the robust US sports betting market with the bid.
“This seems like a lot of money to spend for this. This looks like a sign of fear to me. It doesn’t make a lot of sense,” an analyst claimed.
Fanatics CEO Michael Rubin also asserted that they were “skeptical” of the last-minute proposal and that it seemed like an attempt to slow down the progression of the initial deal.
“We are skeptical of the DraftKings proposal which seems like a desperate move to slow down Fanatics and PointsBet from completing a deal,” Rubin said.
“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.”
DraftKings’ stock was up 1.5% to $25.20 following its all-cash offer to buy PointsBet on Friday.
Besides Fanatics and DraftKings, multiple companies have expressed their interest in acquiring the PointsBet USA division after it announced its intention to sell the subsidiary.
The Australian-based firm entered the US market in 2018 and has experienced rapid growth and success since. PointsBet, however, started facing issues such as plummeting EBITDA, rising revenues, and an unexpected cash outflow which led to its decision to sell the US arm.
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