Fanatics is fanatical about buying into the online sports betting site PointsBet and leaving DraftKings out in the cold. To ensure they can buy PointsBet’s business in the United States, the company increased its offer to $225 million, which is 50% more than what DraftKings offered earlier.
The shareholders of PointsBet will vote on the new offer on Thursday night. The chairman of PointsBet, Brett Paton, stated that the board fully supports Fanatics’ improved proposal because it offers a better price and certainty. PointsBet gave DraftKings a deadline to make a binding offer, but they failed to do so.
The CEO of DraftKings, Jason Robins, mentioned that the deal wouldn’t have been a game-changer for DraftKings, but it would have helped them increase their market share. If the deal is approved by PointsBet’s shareholders and regulators, it will give Fanatics a presence in the 15 U.S. states where PointsBet operates. Currently, PointsBet is the seventh-largest sports betting operator in the U.S.
When The Duel For PointsBet Started
According to a report in the New York Post over the weekend, the competition between Fanatics and DraftKings for PointsBet can be traced back to a failed merger between Fanatics and DraftKings in 2021. The report suggests that Fanatics CEO Michael Rubin backed out of the merger, which made Robins unhappy. Robins was determined to prevent Rubin from acquiring PointsBet.
Despite the reasons behind their rivalry, both companies competed against each other for PointsBet, and it seems that Fanatics has emerged as the winner, and will now compete directly against rival DraftKings in the local betting market, including in top-performing states such as New York, New Jersey, Michigan, and Pennsylvania.
DraftKings’ offer, which is no longer valid, wouldn’t have resulted in significant profits, even in the future. Almost every state where PointsBet operates is also covered by DraftKings, so this wasn’t an attempt to gain more market share. Additionally, DraftKings already has well-established departments for risk management, trading, and other functions, so it wasn’t an attempt to acquire talented individuals from PointsBet.
Deal Will Be Completed in Two Steps
The completion of the transaction will happen in two stages. Initially, $175 million will be received, which is an increase from the original amount of $100 million. The remaining $50 million will be paid at a later stage called “subsequent completion.”
The specific dates for these stages have yet to be released. According to the original agreement, the initial completion was scheduled around August 31, with subsequent completion expected by February 2024, but it could be extended until May 2024.
Due to the additional $75 million received at the beginning of the closing process, shareholders will receive a distribution of A$1.39 to A$1.44 per share, which is higher than the initial range of A$1.07 to A$1.10 per share. The first payment of around A$1.00 is expected to be made in mid-September.
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