DraftKings enters running for PointsBet’s US division with 11th hour $195m offer
Boston-headquartered operator tables proposal in competition with Fanatics Betting and Gaming’s $150m bid with PointsBet board set to consider new deal
DraftKings has made a non-binding indicative proposal to buy PointsBet’s US business for $195m, in direct competition with rival bidder Fanatics Betting and Gaming (FBG).
News of the competing bid was published in an update on the Australian Securities Exchange (ASX) on June 16, with the proposal being on a cash, debt-free and cash-free basis with no additional financing condition.
FBG submitted a A$222m ($150m) bid to acquire PointsBet US almost exactly a month ago (May 15), with the Australia-headquartered operator’s board of directors confirming its support for the multi-million-dollar deal.
“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’s board of directors said in a statement.
“The entry into the FBG transaction followed a lengthy process (including price and terms discovery) with significant industry participants, including all leading US-based sportsbooks, regarding potential strategic relationships, and that the board had then formed the view that the sale of the US business to FBG delivers the most attractive risk-adjusted value outcome for shareholders,” PointsBet added.
Full details of the competing DraftKings bid have not been disclosed, however the presence of a competing, potentially superior bid will see PointsBet’s board of directors consider the rival proposal.
According to the terms of the FBG agreement, PointsBet is barred from ‘shopping’ its business around to potentially higher bidders and may not engage in any talks of any sort with rival interested parties.
Competing proposals fall into four categories; any arrangement geared at acquiring control, or a relevant interest of 20% in PointsBet shares, acquiring a “substantial” part of the business, or a direct merger.
PointsBet’s board can only pursue the DraftKings bid if it determines that the proposal is more favorable than the Fanatics deal. Should this occur PointsBet must pay a $1.5m break fee if either it or Fanatics reneges on the acquisition.
FBG’s bid allows PointsBet’s wider global business perpetual, royalty-free license to exploit assets from its Banach Technology business (including the underlying source code driving OddsFactory), with an option to utilize these assets outside the US.
As part of the arrangements, PointsBet agreed to provide services to FBG prior to the final closing of the deal and be reimbursed for the cost of these services by FBG.
This includes PointsBet providing $21m in funding for the US business from the conclusion of the shareholder meeting to the completion of the deal, something which DraftKings proposal does not include.
“It should be noted that the DraftKings proposal does not constitute a binding offer or commitment on the part of DraftKings to negotiate or execute a definitive agreement and, to this end, there is no guarantee that the DraftKings proposal will result in a binding definitive agreement,” PointsBet said in a statement confirming the DraftKings bid.
“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 FBG transaction,” the firm added.