A renowned sport betting operator, DraftKings Inc., has revealed its intentions to acquire the US operations of the Australia-based sports wagering giant PointsBet. According to the press release, DraftKings delivered a letter to both the Non-Executive Chairman and Chief Executive Officer of PointsBet Holdings Ltd on June 16, 2023 detailing the indicative offer for the intended acquisition and a purchase price of $195 million.
Superior Offer:
The offer represents a 30% higher value in comparison to the $150 million Fanatics’ offer already received by the Australian operator. The offer is reportedly given on ”debt-free and cash-free basis” and generally identical to the seller’s existing agreement with the Fanatics.
DraftKings indicated in the letter that it would use cash from its balance sheet with no need to raise any additional capital. The company also assured that it can arrange all regulatory and other approvals and procedures to complete the acquisition within a shorter time frame than the Fanatics.
The US sports betting leader also advised that its offer is ”superior” as it combines synergies of the PointsBet’s US operations and the scaled position of DraftKings in the US market. DraftKings reportedly expects to use the acquisition to improve and rationalize its product range and marketing facilities and expand its in-house capabilities.
DraftKings hired BofA Securities and The Raine Group as financial advisors for the acquisition.
Synergy Creation Capability:
Jason Robins, DraftKings’ Chief Executive Officer and Co-founder, stated: “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 capitalize on compelling opportunities at attractive valuations, as is the case with PointsBet’s U.S. business.”
Robins added: ”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.”
Expecting Increased EBITDA Potential:
Jason Park, DraftKings’ Chief Financial Officer, stated: “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 U.S. business, including offering our customers interesting new bet types and accelerating our roadmap of bringing in-house more of our mobile sports betting technology.”
Awaiting PointBet’s Decision:
PointsBet decided to sell its US business in April 2023 to focus on the domicile market, hiring the investment bank Moelis & Company to facilitate the transaction. The largest sportsbooks in the United States are now trying to capitalize on the opportunity, with DraftKings now raising the purchase price to $195 million.
PointsBet therefore arrives in a position to see whether the Fanatics will respond to the challenge or withdraw from the competition and enable DraftKings to complete the acquisition.
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- Source: https://news.worldcasinodirectory.com/draftkings-offers-195-million-for-pointsbet-us-operations-109280
