US sportsbook giant DraftKings has launched a shock bid to buy PointsBet’s US operations, which it values at $195m.
The news comes after many thought Fanatics’ takeover of PointsBet’s US operations was a ‘done deal,’ however, DraftKings’ offer is 30% above what Fanatics is offering.
The deal will be an all-cash transaction, should it go through, and will be subject to conditions laid out in DraftKings’ proposal.
Such conditions include a ‘Timeline to Signing a Definitive Agreement,’ meaning that DraftKings wants the deal done in three weeks – and a ‘Required Approvals and Timeline to Closing,’ which details DraftKings’ expectation that regulatory approval will not be a problem and faster than any deal with Fanatics.
"We will also look to prudently capitalise on compelling opportunities at attractive valuations, as is the case with PointsBet’s US business" - Jason Robins, DraftKings CEO
Jason Robins, DraftKings’ CEO and Co-founder, said in making the bid: “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 capitalise on compelling opportunities at attractive valuations, as is the case with PointsBet’s US business.
“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.”
Meanwhile, Jason Park, DraftKings’ CFO, added: “We expect this transaction to increase our adjusted EBITDA potential in 2025 and beyond and not impact our expectations of achieving positive adjusted EBITDA in 2024.
“We are excited about the potential synergies available by acquiring PointsBet’s US business, including offering our customers interesting new bet types and accelerating our roadmap of bringing in-house more of our mobile sports betting technology.”
As the US market’s seventh biggest online sportsbook, PointsBet announced a strategic review of its US operations, effectively putting it up for sale in April. Many had expected Fanatics would close the deal after it made a $150m bid in mid-May, but now DraftKings has thrown a spanner in the works by offering $45m more.
The move could be seen as an effort from DraftKings to keep pace with FanDuel and stop Fanatics, a large sports merchandising brand, from entering the market. It will be interesting to see how Fanatics responds to DraftKings’ bid, with both having significant funds to increase their respective offers – it seems that, now, DraftKings has caused what could be an expensive bidding war.
A response from Michael Rubin showed that he evidently believes the move is an attempt by DraftKings to keep Fanatics down, stating to CNBC: “It’s a move to delay our ability to enter the market. I guess they are more concerned about us than I would have thought.”
Back when it appeared this was a one-horse race, Gambling Insider spoke with PointsBet Group CEO Sam Swanell on the GI Huddle.
