PointsBet Holdings Limited caused some turbulence in the sports betting industry following an announcement that it would successfully close a takeover deal with the US sports betting and daily fantasy sports giant DraftKings regarding the latter’s acquisition proposal.
Although the company’s board called for PointsBet shareholders to vote in favour of the previously proposed takeover deal by Fanatics, recent media reports claim that DraftKings may emerge as the one winning the competition for the Australian sportsbook assets. The company described its previous deal with Fanatics as an inferior one, providing DraftKings with a prime opportunity of finalizing the acquisition deal.
The sale of the US-facing unit of PointsBet is still making the headlines as US sports betting and DFS industry leaders DraftKings and Fanatics are competing for the acquisition of the lucrative assets. The Australian-based sports betting operator has revealed plans to exit the US market in an effort to consolidate the rest of its business and as part of these plans, it agreed on a $150-million deal with the online sports betting operator Fanatics. A competing takeover bid by DraftKings, however, put that agreement under question.
In a recent official update, PointBet claims that the $195-million offer of DraftKings was superior to its previous agreement with Fanatics and eventually entered takeover negotiations with the US sports betting and DFS giant. The Australian company explained that its decision did not constitute an actual bidding agreement and further noted that it would issue a final settlement on the takeover bid that offers the best value for its shareholders, with the proposed price of the deal representing only one part of the consideration.
According to the company’s official update, PointsBet’s directors have determined that the takeover proposal of DraftKings represents a better opportunity for its business and could reasonably be expected to be named a superior proposal.
Australian Sports Betting Operator Will Probably Drop Prior Agreement with Fanatics as Inferior
As mentioned above, the Australia-based sportsbook urged its shareholders to back the previously proposed deal by Fanatics, saying that it still represented significant value for the company’s US assets. However, even if they do so, this will not make the takeover bid of DraftKings invalid, making the possibility of an eleventh-hour shift even more likely.
This basically means that Fanatics could lose out on a major opportunity for further expansion in the US sports betting market in case DraftKings manages to guarantee timely execution of the deal, as well as regulatory approval of the proposed acquisition.
According to market analysts, such last-minute changes are not unexpected, especially when it comes to publicly-traded companies that prioritize shareholder value. The DraftKings acquisition bid would provide PointsBet with an additional $45 million that could be enough to offset the risk of dropping the “inferior” bid of Fanatics. PointsBet will ultimately seek the best return on the investments it had once made in its US division as it seeks to enhance its cash reserves and puts its core operations and growth strategies in order markets as a priority.
On the other hand, the US operations of the Australian gambling operator are considered a lucrative asset because they are expected to substantially bolster the buyer’s market presence in the country as a result of the purchase of an already established customer base. Such a takeover would also boost the buyer’s technological capabilities.
PointsBet would have to settle on a binding agreement with its chosen partner, especially now, as the acquisition negotiations with DraftKings progress. According to reports, the company is likely to drop the bid made by Fanatics, which unfortunately will probably lose a precious opportunity to secure a bigger foothold in the US sports betting sector where the competition becomes more fierce than ever.
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Olivia Cole
