PointsBet’s US sale disrupted as DraftKings lobs late bid

PointsBet’s sale of its US wagering division to Fanatics, the merchandising giant backed by rapper Jay-Z, has stalled at the last minute after a late matching bid from US behemoth DraftKings.

This masthead revealed in May that PointsBet finalised the sale of its US division to Fanatics Betting and Gaming for $US150 million ($225 million) and it was to be voted on by shareholders this month.

PointsBet revealed to the Australian Securities Exchange on Friday afternoon that DraftKings had lodged a late bid with a headline purchase price of $US195 million ($283 million) in cash, on a debt-free and cash-free basis with no financing condition.

PointsBet said its board would now determine whether the DraftKings proposal could be reasonably expected to lead to a superior proposal for the US arm of the business.

The board would consider all things which go to shareholder value, including the amount and timing of capital returned to shareholders, and whether the sale could be completed quickly.

“It should be noted that the DraftKings proposal does not constitute a binding offer or commitment on the part of DraftKings to negotiate or executive a definitive agreement, and to this end, there is no guarantee that the DraftKings proposal will result in a binding definitive agreement,” PointsBet’s board disclosure committee said.

DraftKings is a major US wagering business and is listed on the Nasdaq. Its bid for PointsBet is higher than the pre-agreed offer from Fanatics. It is not yet clear whether Fanatics will lodge another bid, or whether the PointsBet board will seek one or be content with the existing offer.

Under the terms of the Fanatics sale, it would acquire PointsBet’s US operations, while PointsBet would retain its Australian and Canadian outfits. PointsBet has been advised by Moelis & Co and Flagstaff Partners on the deal.

One wagering source close to the negotiations said it was possible DraftKings’ bid was an attempt to spoil or stall the Fanatics sale due to its late timing.

Regardless of which business PointsBet chooses to sell to, it will be the first major wagering acquisition in Australia since the rapid online betting boom caused by COVID-19 began to ease off, prompting many industry experts to predict a period of rapid consolidation.

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