Sports-betting company DraftKings made a last-minute $195 million offer to acquire the U.S. operations of Australia-based PointsBet, topping a bid from Fanatics valued at $195 million last month. Fanatics reported it did not think DraftKings made the offer in good faith.
“We are skeptical of the DraftKings proposal, which seems like a desperate move to slow down Fanatics and PointsBet from completing the deal as the purchase price and other financial commitments will total more than $500 million—so they are using the majority of their projected year-end cash just to try to block us,” Fanatics CEO Michael Rubin said in a statement.
On May 15, Fanatics agreed to acquire the U.S. operations of PointsBet.
PointsBet’s sale to Fanatics was subject to shareholder approval at a meeting scheduled for June 30. The bid from DraftKings comes with just enough time for PointsBet to evaluate and change course if it so chooses.
DraftKings CEO Jason Robins said, “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. 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.”
Robins told CNBC that while the deal would not be transformative for DraftKings, it would allow the company to grow its market share.
“We do not expect this to have any impact on the path to profitability,” Robins added.
If the DraftKings deal moves forward, it would be a major blow to Fanatics’ sports betting efforts. The agreement with Fanatics would have given the company access to at least 15 states where PointsBet operates. Fanatics expected to gain access by the start of the NFL season.
Fanatics, the largest sports apparel and collectibles company worldwide, entered the sports betting landscape in January 2023, when it began operating a brick-and-mortar sportsbook in Maryland at FedEx Field. The company has since launched beta versions of its mobile sportsbook in Ohio and Tennessee and started taking bets in Massachusetts on May 25.
Pointsbet, in a statement, stressed that DraftKings’ offer is not a binding deal and plans to stay the course with the Fanatics purchase vote “subject to the outcome of the review.”
“Subject to the outcome of the review being undertaken of the DraftKings Proposal, the Board continues to recommend that Shareholders vote in favor of the FBG (Fanatics Betting and Game) Transaction,” Pointsbet wrote.
