Fanatics Raises PointsBet Offer to $225 Million as DraftKings Steps Aside
The brief fight over the future of PointsBet’s U.S. business appears to be done, after Fanatics submitted a revised $225 million offer, a 50% increase over its original proposal.
The cash offer was “unanimously recommended” by the PointsBet board, according to a statement released on Tuesday evening ET. DraftKings, which recently submitted a non-binding offer that it said was superior to Fanatics’ original bid, was “unable” to finalize a binding offer before Tuesday’s deadline, according to the statement.
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The PointsBet board believes the new Fanatics proposal is “superior in terms of both pricing and certainty of being able to complete on a timely basis,” the statement said.
PointsBet (ASX: PBH) shareholders will vote on the Fanatics offer on Friday. A representative for Fanatics declined to comment; a representative for DraftKings (NYSE: DKNG) said the company was aware of the new Fanatics offer but had “no further comment.”
The new bid should put to rest a short-lived business quarrel between Fanatics, which is gradually launching its betting product, and DraftKings, one of the county’s largest online sportsbooks. In May, PointsBet announced that Fanatics had offered $150 million for its U.S. business. One month later, DraftKings said it had made a $195 million offer that CEO Jason Robins called “superior.” PointsBet then began negotiating with both parties.
Fanatics wanted PointsBet’s U.S. business because it would accelerate its own push into the industry—giving it technology, trading capabilities, and valuable market access to a number of states. Fanatics CEO Michael Rubin called the DraftKings move a “desperate” attempt to slow down Fanatics’ plans. Fanatics recently raised money at a $31 billion valuation; DraftKings’ market cap was $12 billion at the close of trading on Tuesday.
The new Fanatics offer features payments made in two stages, similar to the original. In the new offer, Fanatics will pay $175 million at closing (up from $100 million in the original offer), and another $50 million due in February 2024—same as the original deal. In other words, the initial $175 million payment includes the entirety of the $75 million that Fanatics added to its proposal.
The PointsBet board also said the capital distribution to shareholders under the new offer would be $0.93-$0.96 ($1.39-$1.44 AUS). It was $0.71-$0.73 ($1.07-$1.1 AUS) under the original proposal.
Headquartered in Australia, PointsBet launched in the U.S. in 2019 and was one of the more aggressive sportsbooks in its first few years after closing a $500 million deal with NBC Sports and pioneering a partnership with the University of Colorado. Its business has flagged recently in the face of mounting competition and rising customer acquisition costs. The NBC deal was amended in February; the Colorado deal was terminated in March.
PointsBet’s Canada business is not part of the proposed takeover.
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