The PointsBet board of directors has notified investors that it will engage in talks with DraftKings in the wake of the operator bidding $195m for the ASX-listed firm’s US business.
Following a weekend of deliberation, PointsBet has outlined that the bid of $195m “could reasonably be expected to lead to a superior proposal”, therefore has decided to engage in talks with the Boston-based operator.
DraftKings caused a shock on Friday when it submitted a bid to purchase the US business of the Australian-based operator, which had already agreed a $150m deal with Fanatics.
A PointsBet release explained: “The Directors of PointsBet have considered the DraftKings Proposal; and acting in good faith, have determined that the DraftKings Proposal could reasonably be expected to lead to a Superior Proposal, and, to this end, PointsBet, will now engage with DraftKings on the DraftKings Proposal.”
Despite Fanatics coming out and dismissing DraftKings bid as a “desperate” move to block its own takeover and progress, Jason Robins has outlined that the bid for PointsBet US is due to the “attractive valuation” of the company.
Robins noted: “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.
“We believe DraftKings is uniquely positioned to submit this superior proposal due to our scale and corresponding ability to generate meaningful synergies from the acquisition.”
Indeed, a DraftKings spokesperson doubled down that this move was not to block Fanatics from acquiring the business, but that it is a “great deal with meaningful potential synergies”.
The DraftKings source told SBC Americas: “We believe the 30% premium is a compelling proposal, and want to reiterate that first and foremost we are pursuing this acquisition because it makes sense for DraftKings. It is not a defensive deal.”
Despite issuing the update that the DraftKings deal will be engaged with, PointsBet has still recommended that shareholders approve the Fanatics offer at the EGM on June 30.
Fanatics agreed to pay $150m for PointsBet US last month in a deal that would gain access to 14 US states as well as buy its Banach technology.
Fanatics declined to comment on the latest developments, though Michael Rubin, CEO of the company, stated last week that he was “skeptical” of DraftKings’ proposal.
Rubin stated: “We are skeptical of the DraftKings proposal which seems like a desperate move to slow down Fanatics and PointsBet from completing the deal as the purchase price and other financial commitments will total more than $500m – so they are using the majority of their projected year-end cash just to try to block us.”