After lengthy negotiations, PointsBet sold its US wagering business to Fanatics for $225 million, as New York Post (NYP) reports. The sale came in the photo-finish of the bidding war between the Fanatics and DraftKings to allow the Australian company to recommend shareholders to vote in favor of the takeover on June 30, according to the Sydney Morning Herald (SMH).
Bidding War:
The initial agreement between PointsBet and Fanatics Betting and Gaming reportedly settled at $150 million in May 2023. A month later, DraftKings offered to pay $195 million for the PointsBet’s US sports betting vertical. But, NYP reports that the actual cost was much higher as PointsBet had a four-year $250 million advertising agreement with NBC.
It means that the actual value of the deal arrived at $475 million against the industry analysts’ estimates having been reportedly hovering around $ 500 million for the sales price added on the NBC advertising deal.
$225 m Winning Bid:
Fanatics responded to the DraftKings’ challenge with the $225 million bid offered in the 11th hour of the sale process and won the bidding war for the acquisition of the US betting subsidiary of the Australia-based PointsBet. Fanatics Betting and Gaming is now reportedly ”breathing a small sigh of relief” after the completion of the deal. At the same time, the acquisition will, as NYP reports, help Fanatics solidify its position in the US sports betting market and allow the company ”to move at maximum speed.”
PointsBet Board’s Unanimous Support:
On the other hand, PointsBet’s chairman Brett Paton said that the final bid was unanimously supported by the board, as the Sunday Morning Herald reports. Patton reportedly said: “The improved proposal delivers PointsBet shareholders a 50 per cent or US$75 million [$112 million] increase to the acquisition price originally agreed with Fanatics Betting and Gaming.” The same source reports that the PointsBet shareholders will benefit from the share price ranging from AU$1.39 to AU$1.44 after the sale.
Fanatics’ Comprehensive Offer:
SMH also reports that DraftKings were not able to meet the deadline to submit a formal offer by 6 pm on June 27, 2023. Also PointsBet have required DraftKings to meet all conditions of the Fanatics‘ initial deal which reportedly included a $21 million cash burn. DraftKings’ extension request was denied, while Fanatics reportedly agreed to cover the cash burn.
Strengthening Market Position:
With up-to-date technology and 14 US state licenses, PointsBet is one of the largest online sports betting operators in the United States. As indicated above, Fanatics Betting and Gaming will use the brand to strengthen its market position. DraftKings, the second-biggest US wagering operator with superior technology and 21 state licenses, may have not needed the acquisition at all, but the company may have attempted the acquisition to control the competition. But the $225 Fanatics’ offer established full control over the PointsBet deal.
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