Fanatics Ups Stakes, Makes $225M Bid For PointsBet US Purchase

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Fanatics, the giant sports merchandise company that is moving into sports betting, has increased its bid for PointsBet’s US operations to $225 million. The new offer comes after a $185 million bid for PointsBet US from rival sportsbook DraftKings was made earlier this month.

Australian-based operator PointsBet has urged its investors to vote in favor of Fanatics’ revised takeover offer. After months of back and forth, the issue will finally be decided with a shareholder vote at the end of this week, June 30.

Fanatics CEO Michael Rubin was previously critical of DraftKing’s bid. “Seems like a desperate move to slow down Fanatics and PointsBet from completing a deal,” he said when it was announced.

Superior Pricing

PointsBet’s board has deemed Fanatics’ offer superior to its rival’s offer.

“DraftKings was unable to finalize a binding offer by 6 p.m. (Melbourne time) Tuesday 27 June 2023, and accordingly, the Board has determined that the FBG Transaction, as improved by the above-stated amendment, is superior in terms of both pricing and certainty of being able to complete on a timely basis,” said a company statement.

The board has unanimously recommended that investors approve the transaction with Fanatics.

The $225 million offer is divided into two parts: $175 million in cash at the initial completion of the transaction, and the remaining $50 million when the acquisition is finalized.

The increased bid means that PointsBet is offering more cash to its investors upon completion. The company plans to distribute the capital over two tranches, with the first of A$1 per share to be sent out in early September.

As we reported in April when rumors first surfaced that PointsBet US was up for sale, CEO Sam Swanell was originally looking for a ballpark figure of $250 million for the business.

Strategic Acquisition for Fanatics

The acquisition of PointsBet US will significantly boost Fanatics’ presence in the mobile sports betting market.

The $31 billion valuation of the sports merchandise company aims to be live with mobile sports wagering in at least a dozen states by the start of the football season.

Despite failing to gain a real foothold in the US (partially because of top-dog competition from DraftKings and FanDuel) PointsBet is still licensed to operate in 14 states.

PointsBet US also holds a New York license. That’s a significant plus for Fanatics, given that New York is the largest state by sports betting handle, and the fourth-largest by population.

Fanatics Betting and Gaming division CEO Matt King also praised PointsBet’s behind-the-scenes tech. “They built a good product, really with limited resources compared to the competition,” he said, speaking on the future of his company in May.

Shareholder Benefits

While DraftKings did not make a binding offer for PointsBet’s US operations, its bid may have achieved its speculated purpose by forcing upcoming competitor Fanatics to increase its own outlay in getting the deal done.

For his part, PointsBet Chairman Brett Paton was looking forward to the future, and a big payday.

“Subject to shareholder and regulatory approvals, our US team will have a strong future as part of the Fanatics Betting and Gaming group,” he said.

“Fanatics Betting and Gaming conducted their diligence process and negotiations in a highly professional manner at all times. The offer to ‘front end’ the additional consideration is an element which we regarded as a welcome and a significant benefit to our shareholders.”

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