According to a report from the NY Post, the bid from DraftKings to buy PointsBet out from under the nose of Fanatics might be more personal than others realized.
The Post alleges that in 2021 DraftKings and Fanatics were deep in discussions for a $48B deal that would merge the two companies with a 50/50 split. The article said it was Fanatics CEO Michael Rubin who walked away from discussions.
Fanatics declined to comment when asked about the veracity of the article.
The deal talks supposedly came at what was a high point in the valuation of DraftKings. Share prices peaked at nearly $75 in March 2021 and were still trading at more than $62in September before the company shares dropped steeply, ending the year at roughly $27 after some rough earnings reports and the company admitting that expansion would likely slow as fewer states legalize sports betting.
Share prices were on the rise after a productive Q1 report for the company but trading has trickled down since the company announced its non-binding $195 million offer to purchase PointsBet last week.
DraftKings and FanDuel made a similar play to create a mega-merger in 2017 prior to the repeal of PASPA. However, the Federal Trade Commission (FTC) blocked the merger of the two DFS giants because it would create a monopoly, with the two groups owning more than 90% of the market. Then, in 2020 DraftKings issued its IPO.
While PointsBet and DraftKings would not constitute such a dominant monopoly, it remains to be seen if the FTC would object to such a deal.
Accordingly, Points Bet Chairman Brett Paton asked in his letter to DraftKings CEO Jason Robins for a “hell or high water” standard to the deal which would require DraftKings to pay the full amount of the acquisition offer even if it does not meet regulatory approvals.
PointsBet is currently speaking with DraftKings about the offer, but in his letter, Paton noted the board is still recommending shareholders vote through the Fanatics offer unless a binding deal from the other bidder comes to the table.
