NY Post: DraftKings CEO Blocking Fanatics Bid for PointsBet After Failed 2021 Merger

• According to a New York Post report, DraftKings CEO Jason Robins is blocking the Fanatics bid for PointsBet after failed merger
• New York Post source claims DraftKings and Fanatics attempted to merge companies in 2021
• The source says Fanatics CEO Michael Rubin walked away from the merger

According to a New York Post report, PointsBet may become the beneficiary of a past-feud between two CEOs as it looks to sell its U.S. assets.

Last week, the New York Post reported that DraftKings CEO Jason Robins pitch to purchase PointsBet’s U.S. assets is a direct result of a failed 2021 merger between DraftKings and Fanatics. DraftKings last minute offer to purchase the U.S. assets of PointsBets, according to a Post source, is due to a grudge Robins has held against Fanatics CEO Michael Rubin after he allegedly walked away from the merger.

The 2021 merger would have been a 50/50 split with each company valued at $24 billion.

Last Minute Deal to Block Fanatics?

In a move seemingly off the pages of a “Succession” script, DraftKings Inc. announced two weeks ago they had submitted a bid of $195 million in cash to acquire the U.S. assets of PointsBet, topping an earlier proposal of $150 million from Fanatics to acquire the business.

The DraftKings deal is $195 million in cash, a 30% premium to the Fanatics proposal, and will not be subject to any financing conditions.

According to the Post, the proposal is firmly a strategy from DraftKings to block Fanatics from expanding its sports betting market, and blocking the company from entering the New York sports betting market.

PointsBet was issued one of nine original New York online sports betting licenses in 2021.

The Post reported that Rubin walked away from the 2021 merger and Robins has held a grudge ever since. Here’s what the Post wrote:

“But Rubin, whose net worth is pegged by Forbes at $11.4 billion, walked away near the end of the process, the sources said. In response, Robins — who has since seen DraftKings shares plunge by more than half, leaving his entire company valued at just $11.5 billion — has held a grudge ever since, the sources said.”

A DraftKings spokesperson told the Post that any suggestion “that there is an ulterior motive that is personal and not business related is irresponsible and not grounded in reality.”

DraftKings ‘Superior’ Proposal

DraftKings’ proposal is a 30% increase from the Fanatics bid. While the PointsBet board had agreed to a sale to Fanatics, the acquisition still depended on an upcoming shareholder vote.

The PointsBet board of directors provided an update on the potential sale of the company’s U.S. assets last week, noting that the board has considered the DraftKings’ proposal “and acting in good faith, have determined (after consultation with the company’s financial and legal advisors) that the DraftKings Proposal could reasonably be expected to lead to a Superior Proposal.”

PointsBet, with assistance of its financial and legal advisors, announced it will now engage with DraftKings on its proposal to purchase the U.S. assets of the company for $195 million.

PointsBet has a scheduled June 30 shareholder vote on the Fanatics bid to purchase its U.S. assets. The PointsBet board announced last week that it is still recommending its shareholders vote in favor of the Fanatics proposal of $150 million to purchase the U.S. assets of the company while it considers the DraftKings offer.

DraftKings delivered a letter to both Brett Paton, non-executive chairman, and Sam Swanell, chief executive officer, of PointsBet indicating an offer to acquire the U.S. assets of the business.

In the letter, Robins described his company’s bid as a “superior proposal” which delivers a “significant premium” to the Fanatics’ proposal.

“While we understand that PointsBet is currently party to a Stock and Equity Sale Agreement (the “Existing Agreement”) with Fanatics Betting and Gaming (“Fanatics”) for the sale of the US Business, our Indicative Offer and the Proposed Transaction delivers a significant premium to Fanatics’ offer for the US Business, and we believe that your board of directors will agree that it constitutes a Superior Proposal as defined under your Existing Agreement, both due to the value it would deliver to your shareholders and our expected ability to consummate the Proposed Transaction more quickly with improved consideration and otherwise on terms that are substantially similar to those you have agreed with Fanatics,” Robins wrote in the letter.

Delayed Market Access for Fanatics?

If Fanatics is outmaneuvered for the company, it will delay market access into several states for its sports betting operation. PointsBet has U.S. market access in 14 states, including New York, New Jersey, Michigan, and Pennsylvania. Without the purchase Fanatics Sportsbook will likely be unable to enter the New York and Michigan sports betting markets, and could find difficulty in entering New Jersey as well.

Fanatics currently has licenses to operate in Massachusetts, Maryland, Ohio, and Tennessee.

Fanatics CEO Michael Rubin told CNBC that he’s skeptical of the proposed DraftKings bid to purchase the company.

“It’s a move to delay our ability to enter the market,” Rubin said. “I guess they are more concerned about us than I would have thought.”