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PointsBet announced late Tuesday (June 27) that its board of directors will recommend that shareholders accept an increased offer from Fanatics to purchase its U.S. business for $225m.
In addition, the company said that DraftKings, after making a non-binding offer on June 16 to purchase the business, failed to advance that into a binding proposal by the Tuesday deadline.
PointsBet shareholders are set to meet this Friday (June 30) to vote on whether to accept the Fanatics proposal.
PointsBet initially announced on May 15 that it had reached an agreement to sell the U.S. portion of the Australian-based bookmaking business to Fanatics Betting and Gaming for $150m, and recommended shareholders accept the deal at that time.
However, on June 16, DraftKings announced it had submitted a superior proposal, offering $195m for the U.S. business. PointsBet announced on June 19 that it would review the offer while maintaining its recommendation to shareholders to vote favorably on the Fanatics bid.
On Monday (June 26), Fanatics submitted a revised proposal, offering $225m to purchase the business, a 50 percent premium on the originally agreed-upon price, with a two-stage completion process.
Under the terms, $175m would be paid at the completion of the first stage, with the remaining $50m being paid at the second stage.
PointsBet said that following DraftKings’ unsolicited offer, the company facilitated a due diligence process for DraftKings and set a deadline of Tuesday to finalize a binding offer, which the company was unable to meet.
As such, the PointsBet board is recommending shareholders accept the revised Fanatics offer because it “is superior in terms of both pricing and certainty of being able to complete on a timely basis.”
“The board unanimously supports the improved proposal from Fanatics Betting and Gaming, which provides a superior price plus certainty,” PointsBet chairman Brett Paton said in a statement. “Fanatics Betting and Gaming conducted their diligence process and negotiations in a highly professional manner at all times.
“The offer to ‘front end’ the additional consideration is an element which we regarded as a welcome and significant benefit to our shareholders,” he continued.
“Subject to shareholder and regulatory approvals, our U.S. team will have a strong future as part of the Fanatics Betting and Gaming group and PointsBet will build on the opportunities in Australia and Canada underpinned by a strong balance sheet.”
The jousting between Fanatics and DraftKings comes amid a report from the New York Post that the two companies were in “deep talks” to merge in 2021, but ultimately Fanatics withdrew from the negotiations.
“It’s a move to delay our ability to enter the market,” Fanatics CEO Michael Rubin told CNBC about the DraftKings offer to purchase PointsBet’s U.S. operations. “I guess they are more concerned about us than I would have thought.”
