• In a stunning move, DraftKings submitted a $195 million proposal to acquire U.S. assets of PointsBet
• Fanatics had previously submitted a $150 million proposal to acquire the business
• PointsBet shareholders were set to vote on the Fanatics proposal during a shareholder meeting on June 30

In a move seemingly off the pages of a “Succession” script, DraftKings Inc. today announced they have submitted a bid of $195 million in cash to acquire the U.S. assets of PointsBet, topping an earlier proposal of $150 million from Fanatics to acquire the business.

DraftKings’ proposal is a 30% increase from the Fanatics bid. While the PointsBet board had agreed to a sale to Fanatics, the acquisition still depended on a June 30 shareholder meeting where a vote on the proposal was scheduled.

“The directors of PointsBet are committed to acting in the best interest of all shareholders and are considering the DraftKings Proposal alongside its advisers,” the company board said in a released statement.

Both proposed deals allow PointsBet to keep its Australian and Canadian based assets.

DraftKings Offer Delivers “Significant Premium”

DraftKings delivered a letter to both Brett Paton, non-executive chairman, and Sam Swanell, chief executive officer, of PointsBet indicating an offer to acquire the U.S. assets of the business.

In the letter, DraftKings’ Chief Executive Officer Jason Robins describes his company’s bid as a “superior proposal” which delivers a “significant premium” to the Fanatics’ proposal.

“While we understand that PointsBet is currently party to a Stock and Equity Sale Agreement (the “Existing Agreement”) with Fanatics Betting and Gaming (“Fanatics”) for the sale of the US Business, our Indicative Offer and the Proposed Transaction delivers a significant premium to Fanatics’ offer for the US Business, and we believe that your board of directors will agree that it constitutes a Superior Proposal as defined under your Existing Agreement, both due to the value it would deliver to your shareholders and our expected ability to consummate the Proposed Transaction more quickly with improved consideration and otherwise on terms that are substantially similar to those you have agreed with Fanatics,” Robins wrote in the letter.

If Fanatics is outmaneuvered for the company, it will delay market access into several states for its sports betting operation. PointsBet has U.S. market access in 14 states, including New York, New Jersey, Michigan, and Pennsylvania. Without the purchase Fanatics Sportsbook will likely be unable to enter the New York and Michigan sports betting markets, and could find difficulty in entering New Jersey as well.

Fanatics currently has licenses to operate in Massachusetts, Maryland, Ohio, and Tennessee.

Fanatics CEO Michael Rubin told CNBC that he’s skeptical of the proposed DraftKings bid to purchase the company.

“It’s a move to delay our ability to enter the market,” Rubin said. “I guess they are more concerned about us than I would have thought.”

The PointsBet board stressed that this is not a binding deal with DraftKings in a release statement and to stay the course with the Fanatics purchase vote “subject to the outcome of the review.”

“Subject to the outcome of the review being undertaken of the DraftKings proposal, the board continues to recommend that shareholders vote in favor of the FBG Transaction,” they wrote.

Capitalizing on Opportunities

The DraftKings deal is $195 million in cash, a 30% premium to the Fanatics proposal, and will not be subject to any financing conditions.

Robins said the company will look to “capitalize on compelling opportunities” at attractive price valuations moving forward.

“While we continue to focus on operating more efficiently and driving substantial organic revenue growth in the United States, we will also look to prudently capitalize on compelling opportunities at attractive valuations, as is the case with PointsBet’s U.S. business,” Robins said in a statement. “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.”

In his letter to PointsBet, Robins noted the following rationales for a potential DraftKings acquisition:

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