PointsBet Halts Trading Ahead of Potential ‘Material Transaction’

• PointsBet has requested a trading halt ahead of a potential material transaction
• The sports betting operator requested the halt “to enable it to manage its continuous disclosure obligations in relation to a material transaction.”
• A shareholder vote is scheduled for Friday, June 30, to consider a Fanatics bid to purchase PointsBet’s U.S. assets

PointsBet Holdings Limited has requested a trading halt on the Australian Securities Exchange until normal trading begins on Wednesday, June 28, or until the company releases an “announcement” to the market, which likely centers around several bids to purchase the company’s U.S. assets.

PointsBet is currently mulling over two offers from Fanatics and DraftKings to purchase its U.S. assets, with shareholders scheduled to vote on the Fanatics bid of $150 million on Friday, June 30.

However, the PointsBet Board of Directors is also considering a recent DraftKings proposal of $195 million.

Trading Halt Related to “Material Transaction”

In its official request, PointsBet asked for the halt to “enable it to manage its continuous disclosure obligations in relations to a material transaction.”

PointsBet noted in its request that it is not aware of any reasons why the trading halt request should not be granted.

It’s an important week for PointsBet’s future, as the company faces a June 30 shareholder vote to determine if it will accepts the Fanatics bid of $150 million to purchase its U.S. assets. PointsBet has U.S. market access in 14 states, including New York, New Jersey, Michigan, and Pennsylvania.

Fanatics Betting and Gaming are currently operational in Ohio, Tennessee, Maryland, and Massachusetts. The company expected to gain access in key markets such as New York, Pennsylvania, and New Jersey with the purchase.

That is until DraftKing entered the picture and threw a potentially “superior proposal” PointsBet’s way.

All Because of a Grudge?

In a move seemingly off the pages of a “Succession” script, DraftKings Inc. submitted a bid of $195 million in cash on June 16 to acquire the U.S. assets of PointsBet. The DraftKing’s proposal is a 30% increase over the Fanatics bid and is all cash.

While the PointsBet board had previously agreed to a sale to Fanatics, the deal depended on the upcoming June 30 shareholder vote before it became official.

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

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.”