PointsBet has confirmed that it has received an unsolicited proposal from DraftKings to buy its US division for $195 million (£152 million / €178.2 million). The company said its board is considering the proposal, which would see DraftKings buy the business with no debt, no cash and no financing terms.
Having now considered the proposal, PointsBet said that DraftKings could lead to a “superior” proposal than the one submitted by Fanatics last month. The company added that it will now engage with DraftKings on its proposals.
However, PointsBet reiterated that DraftKings’ proposal does not constitute a binding offer or commitment to make a formal offer. In addition, the group said it will continue to recommend that shareholders vote in favor of the agreed sale to Fanatics while it considers DraftKings’ proposal.
The vote on the Fanatics deal will take place on June 30 at an Extraordinary General Meeting.
Fanatics executive questions validity of DraftKings offer
PointsBet also addressed certain allegations that DraftKings had only filed a proposal to stop the process with Fanatics.
Last week, Fanatics Chief Executive Michael Rubin said he was “sceptical” of the proposal. He added that it was a “desperate” attempt to slow down the progress of Fanatics’ own contract with PointsBet.
Last month, PointsBet reached a deal for its Fanatics Betting and Gaming arm for $150 million. If FBG’s initial deal is approved, it would grant the company access to 12 states.
Among them are major betting and gaming centers such as New York, New Jersey, Pennsylvania and Michigan. But if PointsBet opts for DraftKings’ proposal, FBG would need to look for other routes to these and other markets.
However, when evaluating the offer, PointsBet said it believed DraftKings acted in “good faith” in submitting its proposal.
PointsBet Executive Sends Letter to DraftKings CEO
In a letter to DraftKings CEO Jason Robins, PointsBet non-executive chairman Brett Paton laid out certain expectations around the proposal. Paton said PointsBet would conduct due diligence and asked DraftKings to do the same.
“Given that DraftKings is a key competitor to PointsBet, it is our strong preference that DraftKings’ due diligence be conducted by a transparent team,” said Paton.
“We suggest that DraftKings provide a fair play protocol that works best for their team. Please confirm that you are aligned with this approach.”
Paton also said that PointsBet would require written confirmation of DraftKings’ position on US funding. “In light of the anticipated heightened scrutiny of an acquisition of PointsBet by DraftKings, compared to the FBG transaction, please provide written confirmation that DraftKings will assume the risk of delaying and/or denial of antitrust approvals,” said Paton.
PointsBet first quarter
DraftKings’ proposal came after PointsBet confirmed in April that the deal was in “multi-party” talks over the sale of its North American arm.
The company also said it had ended previously reported talks to sell its Australian business to the News Corp-backed gaming venture behind the Betr brand. Despite this, PointsBet said it remains in discussions with “other groups” who have expressed an interest in acquiring the business.
This came after a first quarter in which PointsBet saw a 39% increase in year-over-year revenue. Expansion in North America drove growth, with revenue up 103% year-over-year to $49.8 million.
PointsBet‘s Canadian business also experienced rapid growth during the period; growing 21% on a quarterly basis to $6.1 million.
Despite this, the company said it expects to see an EBITDA loss of between $77 million and $82 million in the period. Due to these pressures, the company tried to cut costs to drive the business towards profitability.
