In an unexpected move, DraftKings, a prominent wagering group listed in the US, has submitted a $195 million offer to acquire PointsBet's business in the United States.
This bid surpasses the previous $150 million proposal from Fanatics, a Florida-based company, which was disclosed by PointsBet on Friday.
According to PointsBet's filing on Friday, the offer from DraftKings has yet to be evaluated by the PointsBet board. However, the bid was made on a debt-free, cash-free basis without any financing conditions.
PointsBet stated, "The directors of PointsBet are committed to acting in the best interest of shareholders, are considering the DraftKings proposal, and intend to provide their recommendation to PointsBet shareholders in relation to the sale of the US business in advance of the extraordinary general meeting." The extraordinary general meeting is scheduled for June 30th.
PointsBet had previously reached an agreement with Fanatics Betting and Gaming (FBG) in mid-May. In light of the new offer, the board will assess all aspects that contribute to shareholder value, including the amount and timing of capital returned to shareholders and the feasibility of completing the sale expeditiously.
It is important to note that the DraftKings proposal is currently non-binding and does not guarantee a definitive agreement. PointsBet's board disclosure committee stated, "There is no guarantee that the DraftKings proposal will result in a binding definitive agreement."
The unsolicited non-binding indicative proposal from DraftKings, tabled on June 16th, outlines the purchase of PointsBet's business on a debt-free, cash-free basis without financing conditions. PointsBet has confirmed that its board will carefully evaluate the proposal. However, the group emphasized that the proposal does not represent a binding offer or commitment from DraftKings to proceed with a firm bid.
Regarding the Fanatics Betting and Gaming deal, PointsBet had agreed to be acquired by FBG for $150 million. Under this proposal, PointsBet would retain its Canadian and Australian business, continue operating as an Australian Stock Exchange-listed company, and retain its proprietary sports wagering, racing, and iGaming platform. Additionally, PointsBet would retain its teams and provide services to FBG prior to the deal's closure.
While assessing the DraftKings proposal, PointsBet's board will carefully consider whether it offers superior terms compared to the FBG deal. Factors such as shareholder value, the favorability of terms, and the feasibility of a timely completion will be taken into account.
Based on the review's outcome, PointsBet's board continues to recommend that shareholders vote in favor of the FBG transaction.
The latest proposal follows PointsBet's confirmation in April that the company was in discussions with multiple parties for the sale of its North American business. Talks to sell its Australian business to a News Corp-backed gaming venture were terminated.
Despite the challenges, PointsBet reported a 39% year-on-year increase in revenue to AU$106.6 million in the first quarter. The growth was primarily driven by expansion in the North American operations, which experienced a 103% year-on-year revenue rise to $49.8 million.
Although revenue grew, PointsBet anticipates an EBITDA loss of $77.0 million to $82.0 million for H2 FY3. To mitigate these challenges, the company has implemented cost-cutting measures to steer the business towards profitability while expecting lower cash outflows compared to H1 FY23.
The fate of PointsBet's US business hangs in the balance as the board evaluates the DraftKings offer and prepares to make a recommendation to shareholders at the upcoming extraordinary general meeting.
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