Let’s follow this train of thought, shall we:
Fanatics offered PointsBet $150 million for its U.S. business; a month later DraftKings offered $195 million for the U.S. business; a week or so later, Fanatics upped their ante to $225 million; PointsBet board said deal; DraftKings didn’t match the Fanatics bid; game over.
Did it occur to anyone that DraftKings played a role designed to add more money to the PointsBet pot? Seems to be the way it turned out.
DraftKings covered itself by insisting it lacked the time to finalize a binding offer before a deadline.
PointsBet’s board said Fanatics’ offer is better in pricing and certainty, according to Sportico. Shareholders then approved the sale with a 99.16 percent majority on June 30.
“We are thrilled that the shareholders of PointsBet Holdings Inc. voted to approve our acquisition of the U.S. businesses of PointsBet,” Fanatics said in a statement following the vote. “This is a pivotal moment for Fanatics Betting and Gaming that will accelerate our growth in the legal online sports betting, advance deposit wagering, and iGaming markets in the United States.”
When the final document is finalized, Fanatics accelerates its entry into the sports betting business as well as the technology and trade capabilities of other states, and market access to a number of states.
The new Fanatics offer pays PointsBet $175 million at closing and another $50 million in February 2024.
Australian-based PointsBet debuted in the U.S. in 2019 and carried a more aggressive agenda including a $500 million deal with NBC Sports and pioneering a partnership with the University of Colorado. Rising competition and mounting costs made the company untenable.
“The Board unanimously supports the improved proposal from Fanatics Betting and Gaming, which provides a superior price plus certainty,” said PointsBet Chairman Brett Paton in the statement. “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 significant benefit to our shareholders.”
Fanatics offered online sports betting on a limited basis in four states: Tennessee, Ohio, Massachusetts, and Maryland. PointsBet, meanwhile, is live with online sports betting in 14 states, potentially unlocking access for Fanatics in places like New York, Illinois, New Jersey, Michigan, and Pennsylvania.
The initial phase of Fanatics’ acquisition is set to take effect on August 31, when Fanatics will gain the right to acquire the entities that own and operate PointsBet’s business in at least three states.
Since DraftKings informed PointsBet of its non-binding proposal in mid-June, some industry analysts have questioned its motives. One leading analyst, JMP Securities’ Jordan Bender, noted that DraftKings could benefit from the “cross-sell between the product offerings,” additional in-house trading capabilities, and synergies from overlapping fixed costs. At the same time, he emphasized that DraftKings would effectively “box Fanatics out” of the online sports betting space in the near term.
Last week, the New York Post reported that DraftKings and Fanatics held deep negotiations in 2021 on a proposed $48 billion merger.
After talks fizzled, DraftKings CEO Jason Robins began his pursuit of PointsBet, possibly as a way of “returning the favor,” an unnamed sports betting executive told the Post.
Fanatics’ proposal requires at least 50 percent approval from shareholders.
