PointsBet engages with DraftKings on US$195m takeover offer
Australian online bookmaker PointsBet Holdings (ASX: PBH) has agreed to engage with sports gambling powerhouse DraftKings (NASDAQ: DKNG) after receiving an indicative takeover offer for its US businesses for a headline purchase price of US$195 million.
The offer comes a month after Fanatics Betting and Gaming (FBG) agreed to buy the same businesses for US$150 million cash in an effort to boost its presence in sports gambling.
The PointsBet board has determined that DraftKing’s non-binding, all-cash proposal could lead to a more superior proposal than that offered by FBG and has made moves to progress the due diligence process.
Clean team
Given that DraftKings is a key competitor, PointsBet has requested a “clean team” and associated protocol for the process.
PointsBet has also requested written confirmation of DraftKings’ position on funding the cash burn of its US online sports betting, iGaming and retail sportsbook business.
FBG recently capped the cash burn at US$21 million from 1 July.
The PointsBet board continues to recommend that shareholders vote in favour of the FBG transaction.
DraftKings has been given a deadline of 27 June to finalise its transaction documents.
PointsBet said the initial indicative offer could “reasonably be expected to” lead to an offer higher than that proposed by FBG.
Forecast loss
PointsBet is the seventh largest sports betting operator in the US and had forecast a loss of between US$115 million and US$123 million for the six months to end June.
The company appointed investment bank Moelis & Co in an attempt to sell its North American business.
PointsBet chief executive Sam Swanell has previously said that, following the sale of the US business, the company’s operations in Australia and Canada would “break even” within 12 months.
The company is still considering the sale of its Australian operations.
Major competitor
Nasdaq-listed DraftKings has a market cap of around US$10 billion.
The daily fantasy sports contest and sports betting company is a major competitor to PointsBet in several US markets.
It lobbed an indicative offer just one month after FBG’s proposal, and priced it US$45 million higher.
The DraftKings deal has been considered “highly sceptical” by FBG executives and viewed as an attempt to slow down its own transaction.