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Just weeks after newcomer to the world of regulated sports betting announced its desire to purchase the assets of Australian owned PointsBet, DraftKings has come along with a counteroffer.
The acquisition of PointsBet's assets by Fanatics seemed like a done deal at the time and, even then experts were questioning why.
Fanatics may be new to the regulated sports betting landscape and, outside of gaining an immediate foothold in some US states where PointsBet is already licensed, the deal did not seem to make a whole lot of sense. It's been the worst kept industry secret that PointsBet has not posted a profit since launching in the States.
DraftKings has offered to pay $195 million, all-cash for PointsBet’s U.S. assets. Fanatics initially claimed its deal was worth $225 million. The deal has since been valued closer to $150 million.
Fanatics CEO Michael Rubin tells CNBC after the announcement that he’s highly skeptical of the deal, which he views as DraftKings attempting to slow Fanatics down.
“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 $500 million — so they are using the majority of their projected year-end cash just to try to block us.”
Others in the industry expressed skepticism.
Brendan Bussmann, B2 Global managing partner, told Gaming Today, had this to say:
"Today’s offer by DK screams of going to the block to keep competition out of the market and overpaying for a potential M&A activity. While the tech may add a little to the DK offering, someone is going to have to convince me this is more than just trying to limit competition in the market.”
“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 U.S. business,” said DraftKings CEO Jason Robins in a statement. “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.”
Just doing my thing of immortalizing on timeline..
— Alfonso Straffon (@astraffon) June 16, 2023
"...all-cash transaction with a purchase price of $195 million... represents a 30% premium to PointsBet’s existing agreement..."
DraftKings Submits Superior Proposal to Acquire PointsBet’s U.S. Businesshttps://t.co/5rIetfHETN
At the time of the Fanatics/PointsBet announcement last month, the two companies issued a joint statement.
"Fanatics and PointsBet are excited to enter into an agreement for Fanatics Betting and Gaming to acquire PointsBet's U.S. business," the companies said in a joint statement.
"While there are still several steps in the process to complete the acquisition, both parties are confident in the outcome. Fanatics Betting and Gaming and PointsBet will provide further details of the proposed deal and timely updates in the coming weeks."
That's all starting to seem like a distant memory at this point in time.
- Gilbert Horowitz, Gambling911.com
