DraftKings bids for PointsBet’s US operations with 30% higher proposal price
Though an agreement was reached between PointsBet and Fanatics, terms state it may consider such a ‘superior proposal.’
DraftKings has sent a proposal letter to PointsBet’s Non-Executive Chairman, Brett Paton, and Group CEO, Sam Swanell, with an all-cash transaction offer for the acquisition of its US operations, priced at $195m. This offer outshines PointsBet’s current proposal from Fanatics, worth $150m.
Fanatics made the announcement that its Betting & Gaming division would acquire PointsBet’s US business in May, but this proposal just may complicate that plan. DraftKings CEO and Co-Founder Jason Robins outlined key elements of the indicative offer within a letter to Paton and Swanell.
Robins’ letter reads, “While we understand that PointsBet is currently party to a stock and equity sale agreement with Fanatics Betting and Gaming 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.”
DraftKings has not only raised the potential purchase price by 30%, but also called Fanatics on its ability to “consummate the proposed transaction,” stating that it would act quicker on similar agreement terms.
Fanatics CEO, Michael Rubin, told CNBC, “It’s a move to delay our ability to enter the market. I guess they are more concerned about us than I would have thought.”
Jason Park, DraftKings’ CFO, commented outside of the letter, “We are excited about the potential synergies available by acquiring PointsBet’s US business, including offering our customers interesting new bet types and accelerating our roadmap of bringing in-house more of our mobile sports betting technology.
“We expect this transaction to increase our adjusted EBITDA potential in 2025 and beyond and not impact our expectations of achieving positive adjusted EBITDA in 2024.”
Along with financing, the letter lays out required approval timelines to closing, internal DraftKings approvals and conditions and further due diligence before signing a definitive agreement. DraftKings reiterates it is “fully committed” to pursuing the transaction before its signature from Robins.
Robins added, “While we continue to focus on operating more efficiently and driving substantial organic revenue growth in the United States, we will also look to prudently capitalize on compelling opportunities at attractive valuations, as is the case with PointsBet’s US business.”
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