PointsBet Board Recommends Sale of U.S. Assets to Fanatics

• PointsBet Board has unanimously recommended selling its U.S. assets to Fanatics
• Fanatics upped its bid to $225 million after a DraftKings bid of $195 million
• Vote on the proposal will take place during the company’s June 30 shareholder meeting

PointsBet’s U.S. assets are likely on the move to Fanatics Betting and Gaming after the company improved its proposal to $225 million, a 50% increase to its prior $150 million bid to buy the assets.

It ends a wild several weeks for PointsBet, which considered several offers from Fanatics Sportsbook and DraftKings to purchase the company’s U.S. assets. In the end, PointsBet will be able to keep its Australian and Canadian based assets while Fanatics will acquire all of PointsBet’s U.S. assets.

DraftKings entered the fray to purchase PointsBet’s U.S. assets in mid-June with a $195 million offer that the PointsBet Board of Directors officially considered before Fanatics improved their own purchase offer.

Fanatics Gets its Prize

On June 26, Fanatics improved its bid to PointsBet to $225 million while DraftKings was unable to finalize a binding offer to the company by 6 p.m. Melbourne time on Tuesday, June 27. The PointsBet Board of Directors determined the Fanatics offer was “superior in terms of both pricing and certainty of being able to complete on a timely basis.”

“The improved proposal delivers PointsBet shareholders a 50% or US$75 million increase to the acquisition price originally agreed with Fanatics Betting and Gaming. Following the receipt of a non-binding indicative offer for our US Business from DraftKings on 16 June 2023, the PointsBet team entered negotiations with both parties,” PointsBet Chairman Brett Paton said in a press release.

Fanatics will gain market access into several lucrative sports betting markets through the deal. PointsBet  has U.S. market access in 14 states, including New York, New Jersey, Michigan, and Pennsylvania.

“The Board unanimously supports the improved proposal from Fanatics Betting and Gaming, which provides a superior price plus certainty. Fanatics Betting and Gaming conducted their diligence process and negotiations in a highly professional manner at all times. The offer to “front end” the additional consideration is an element which we regarded as a welcome and significant benefit to our shareholders,” Paton said.

All Because of a Grudge?

The sale puts an ends to a strange several weeks of Fantics and DraftKings both vying to acquire PointsBet’s U.S. assets.

In a last minute bid for the business, DraftKings Inc. submitted a bid of $195 million in cash on June 16 to acquire the U.S. assets of PointsBet, two weeks before a scheduled shareholder vote to approve the Fanatics offer to purchase the company.

The bid was $45 million greater than Fanatics $150 million purchase offer, which led PointsBet to declare an official halt of its company trading on the Australian Securities Exchange to consider the offer.

But why the late bid from DraftKings? According to the New York Post, DraftKings CEO Jason Robins pitch to purchase PointsBet’s U.S. assets was 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.

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.”