Fanatics CEO: DraftKings’ PointsBet US offer “a desperate move”
Michael Rubin questions multi-million-dollar bid, alleging it was only filed by DraftKings as an attempt to block rival
Fanatics Global CEO Michael Rubin has reacted angrily to DraftKings’ bid to gazump Fanatics Betting and Gaming’s (FBG) $150m acquisition of PointsBet US, branding it a “desperate” move by the Boston-headquartered operator.
Late on Friday, PointsBet’s Australian owners confirmed receipt of a $195m non-binding cash and debt free proposal from DraftKings to purchase its US division, coming a month after FBG’s own bid.
The proposal, which is set to be reviewed by the firm’s board of directors, drew criticism from Rubin, who questioned whether the bid was sincere. Issuing a short statement, Rubin pulled no punches in his assessment.
“We are skeptical of the DraftKings proposal, which seems like a desperate move to slow down Fanatics and PointsBet from completing the deal as the purchase price and other financial commitments will total more than $500m – so they are using the majority of their projected year-end cash just to try to block us,” Rubin said.
In a response, DraftKings published the full proposal it had sent to PointsBet’s board of directors, outlining the rationale behind the $195m bid, suggesting its bid was “substantially consistent” with FBG’s prior offer, but at the same time at a premium of 30% on its rival’s bid.
“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 US business,” DraftKings CEO Jason Robins wrote in a statement released with the proposal.
“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,” he added.
In the proposal itself, Robins cited three distinct advantages to DraftKings pursuit of PointsBet US, the first of which would come in the form of product enhancements and the “PointsBetting” functionality, which he claimed would differentiate product while driving user engagement.
Secondly, he highlighted the additional in-house capabilities afforded by the acquisition of PointsBet’s tech stack, namely that of Banach Technology, an advantage which Robins suggested would drive down supplier costs.
Lastly, Robins noted there would be considerable synergies from the deal including “improved customer acquisition and monetization, marketing efficiencies” as well as fixed cost reductions.
“We would like to reiterate that DraftKings is fully committed to pursuing the proposed transaction. We are convinced that our indicative offer presents a superior financial outcome for PointsBet shareholders with a clear path to consummation,” Robins wrote.
“We, therefore, strongly believe that a successful transaction on the basis of our indicative offer represents a truly compelling opportunity for all parties involved and would be in the best interests of PointsBet and its shareholders and other stakeholders,” the CEO concluded.
DraftKings has said it expects the deal will generate incremental adjusted EBITDA in 2025, in support of DraftKings’ wider drive to become an EBITDA-positive business by 2024.
DraftKings CFO Jason Park expressed his own support for the potential acquisition in a supporting statement.
“We are excited about the potential synergies available by acquiring PointsBet’s US business, including offering our customers interesting new bet types and accelerating our roadmap of bringing in-house more of our mobile sports betting technology,” Park said.
DraftKings has engaged Bank of America Securities and The Raine Group as its financial advisors, and Sullivan & Cromwell LLP as its legal counsel to support the business during the proposed transaction.