The battle for the operator of several sports betting sites and apps in the United States took an expensive twist as the event wagering arm of Fanatics hiked its bid for PointsBet USA.
Melbourne-based PointsBet Holdings Ltd. announced on Wednesday in Australia (but Tuesday night in the U.S.) that the legal sports betting arm of sports-merchandise seller Fanatics increased its offer for the U.S. business of PointsBet to US$225 million, up 50% from the $150 million previously offered.
The Fanatics bid was forced higher because of a dueling offer from DraftKings, which recently threw out a non-binding proposal to buy PointsBet’s stateside business for US$195 million.
Bidding war over?
PointsBet said Tuesday that DraftKings was "unable to finalize a binding offer" by 6 p.m. Melbourne time, leading the PointsBet board of directors to declare the Fanatics deal as superior and to recommend it to shareholders. Shareholders will vote on the Fanatics deal at an "Extraordinary General Meeting" scheduled for Friday.
While PointsBet's board of directors was forced to consider the offer from DraftKings, as it could lead to an even higher bid, it had recommended shareholders approve the deal proposed by Fanatics in May. The newer and higher Fanatics-PointsBet agreement is now a "two-stage" transaction, with $175 million paid initially and the other $50 million to follow.
"Following the receipt of a non-binding indicative offer for our US Business from DraftKings on 16 June 2023, the PointsBet team entered negotiations with both parties," PointsBet Chairman Brett Paton said in a statement. "The Board unanimously supports the improved proposal from Fanatics Betting and Gaming, which provides a superior price plus certainty.”
Move fast and bet things
The increased offer by the owner of Fanatics Sportsbook suggests the company’s interest in acquiring the market access and U.S. operations of PointsBet is high. Fanatics is only live and beta-testing its app in a few states, such as Ohio.
Tuesday's twist also underlines the financial resources Fanatics has at its disposal, thanks to its massive merchandise operation. That money could ultimately help it carve out a decent share of the U.S. sports betting market for itself — perhaps at the expense of operators such as DraftKings.
DraftKings and Fanatics held secret merger talks of their own a few years back, according to the New York Post.
“While the company would have been fine without the acquisition, moving faster in the current environment is likely better, and the PointsBet deal allows Fanatics to move at maximum speed,” an insider told the paper on Tuesday.
