Fanatics will increase its original offer by 50% to buy the US assets of PointsBet for $225 million, outbidding DraftKings Tuesday evening.
The PointsBet shareholder meeting to approve the deal will still be held at 11 am local time Friday, or 9 PM Eastern Thursday.
DraftKings did not finalize a binding offer by 6 pm local time Tuesday. The company issued a statement later the same evening:
DraftKings Inc. (Nasdaq: DKNG) today announced that the company is no longer pursuing the acquisition of the U.S. business of PointsBet Holdings Ltd. (“PointsBet”). The company thanks PointsBet for their time and access over recent weeks.
Per the amended agreement, PointsBet cannot consider other offers. PBH stock initially climbed 4.3% on the news.
PointsBet board blesses new Fanatics offer
The increased offer from Fanatics is superior to what DraftKings initially offered “in terms of both pricing and certainty of being able to complete on a timely basis,” the board determined.
The board never backed off its decision to support the original Fanatics offer of $150 million without a binding offer from DraftKings, which proposed a $195 million for PointsBet earlier this month but never finalized a bid.
“The Board unanimously supports the improved proposal from Fanatics Betting and Gaming, which provides a superior price plus certainty,” Chairman Brett Paton said. “Fanatics Betting and Gaming conducted their diligence process and negotiations in a highly professional manner at all times. The offer to “front end” the additional consideration is an element which we regarded as a welcome and significant benefit to our shareholders.
“Subject to shareholder and regulatory approvals, our US team will have a strong future as part of the Fanatics Betting and Gaming group and PointsBet will build on the opportunities in Australia and Canada underpinned by a strong balance sheet.”
Updated PBH-Fanatics deal details
The transaction still has a two-stage completion, with $175 million to be received at the “initial completion” of the deal, up from $100 million originally. The other $50 million will be paid at the “subsequent completion.”
No dates for those events were given in Tuesday’s release. The original agreement scheduled the initial completion around Aug. 31, with subsequent completion expected by Feb. 2024, though that could be extended to May 2024.
The additional $75 million at the front end of closing will now lead to a shareholder distribution of A$1.39 to A$1.44 per share, up from A$1.07 to A$1.10 per share originally. The first of two payments will be around A$1.00 and should be paid in mid-September.
