DraftKings, the prominent US sportsbook giant, has taken the industry by surprise with its unexpected bid to acquire PointsBet's US operations for a staggering $195 million.
The move comes as a significant development after many industry insiders believed that Fanatics had all but sealed the deal with PointsBet. However, DraftKings' offer surpasses Fanatics' bid by a notable 30%.
If the deal goes through, it will be an all-cash transaction, subject to certain conditions outlined in DraftKings' proposal. These conditions include a tight "Timeline to Signing a Definitive Agreement," indicating DraftKings' desire to finalize the deal within three weeks. Moreover, DraftKings expresses confidence in obtaining regulatory approval faster than any potential deal with Fanatics through the "Required Approvals and Timeline to Closing" condition.
Jason Robins, CEO and Co-founder of DraftKings, highlighted the company's intent to capitalize on appealing opportunities at attractive valuations, such as PointsBet's US business. Robins stated, "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." This statement emphasizes DraftKings' confidence in leveraging its size and resources to create significant value from the potential merger.
DraftKings' CFO, Jason Park, added, "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 US business, including offering our customers interesting new bet types and accelerating our roadmap of bringing in-house more of our mobile sports betting technology." Park's remarks underscore the company's strategic outlook, highlighting the financial and operational benefits they anticipate from the acquisition.
The surprise bid from DraftKings challenges the prevailing notion that Fanatics had a secure grip on acquiring PointsBet's US operations. As the seventh-largest online sportsbook in the US market, PointsBet initiated a strategic review of its US operations for potential sale in April. While Fanatics initially made a $150 million bid in mid-May, DraftKings has now disrupted the process by offering $45 million more.
This unexpected move by DraftKings can be interpreted as an effort to maintain pace with its fierce competitor, FanDuel, and prevent Fanatics, a prominent sports merchandising brand, from entering the highly lucrative US sports betting market. It remains to be seen how Fanatics will respond to DraftKings' bid, as both companies possess substantial financial resources that could lead to an expensive bidding war.
Michael Rubin, founder of Fanatics, expressed his belief that DraftKings' bid is aimed at hindering Fanatics' entry into the market, stating, "It's a move to delay our ability to enter the market. I guess they are more concerned about us than I would have thought." Rubin's response highlights the competitive dynamics at play and suggests that DraftKings' bid has raised concerns within the industry.
As the story continues to unfold, the unexpected bidding war between DraftKings and Fanatics for PointsBet's US operations promises to be a pivotal moment in the rapidly evolving US sports betting landscape.
By fLEXI tEAM