Pointsbet share price jumps as bidding war heats up for US operations

Pointsbet's US operations are attracting a lot of interest.

| More on:
a man sits at his desk wearing a business shirt and tie and has a hearty laugh at something on his mobile phone.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Pointsbet Holdings Ltd (ASX: PBH) share price has returned to trade with a bang this morning.

At the time of writing, the sports betting company's shares are up 4% to $1.70.

Why is the Pointsbet share price racing higher?

Investors have been scrambling to buy the company's shares this morning after it received a new takeover offer for its US operations.

Earlier this month, fellow sports betting company DraftKings (NASDAQ: DKNG) made a US$195 million offer for the Pointsbet USA business, outbidding a US$150 million offer from rival Fanatics Betting and Gaming in May.

The New York Post reported that this bid was driven partly by the desire of DraftKings' CEO, Jason Robins, to "level the score" with Fanatics boss Michael Rubin after the collapse of merger talks in 2021.

Unfortunately, that score may not be level for long, with Fanatics returning with an improved offer for the business this morning, which has been accepted by the Pointsbet board.

According to the release, Fanatics has increased its offer to a headline cash consideration of US$225 million (~A$333 million). This offer continues to incorporate a two-stage completion, with US$175 million to be received at the initial completion and US$50 million to be received at the subsequent completion.

The Pointsbet board unanimously recommends that shareholders vote in favour of the Fanatics offer at the extraordinary general meeting on 30 June.

What does this mean for shareholders?

Given the increased headline cash consideration, the company currently estimates that distribution of capital to shareholders would now be approximately $1.39 to $1.44 per share.

This proposed distribution of capital is expected to be made over two tranches, with each tranche following shortly after each completion payment. The company advised that it will commence the necessary process to facilitate the proposed distribution in the coming months, with the first tranche of approximately $1 per share expected to be paid in mid-September.

Pointsbet's Chairman, Brett Paton, said:

he improved proposal delivers PointsBet shareholders a 50% or US$75 million increase to the acquisition price originally agreed with Fanatics Betting and Gaming. Following the receipt of a non-binding indicative offer for our US Business from DraftKings on 16 June 2023, the PointsBet team entered negotiations with both parties.

The Board unanimously supports the improved proposal from Fanatics Betting and Gaming, which provides a superior price plus certainty. 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.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended PointsBet. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

Happy man working on his laptop.
Technology Shares

Can Xero shares surpass $200 in 2025?

Let's see what analysts are saying about this market darling.

Read more »

A player pounces on the ball in the scoring zone of the field.
Technology Shares

Why this ASX sports tech share looks like a winner

Catapult Group has been delivering outstanding returns for investors. Will the winning streak continue?

Read more »

A woman smiles as she sits on the bus using her phone and listening to music through headphones.
Technology Shares

Why this top fund manager thinks this ASX tech share can continue rising

Investors can be excited about this stock.

Read more »

Man sitting in a plane looking through a window and working on a laptop.
Broker Notes

Macquarie tips 28% upside for this ASX All Ords tech stock

Let's see what the broker is saying about this growth stock.

Read more »

happy teenager using iPhone
Share Gainers

Up 96% since April, should I still buy Life360 shares today?

A leading expert offers his verdict on the growth outlook for the surging Life360 share price.

Read more »

A female soldier flies a drone using hand-held controls.
Technology Shares

DroneShield shares charge higher on European expansion plans

This high-flying stock is surging again on Tuesday. But why?

Read more »

Human head and artificial intelligence head side by side.
Technology Shares

NextDC share price jumps 8% on big news

Another big announcement has caught the eye of investors this morning.

Read more »

A man sits in contemplation on his sofa looking at his phone as though he has just heard some serious or interesting news.
Technology Shares

Up 60% in two months, is it too late to buy Pro Medicus shares?

Pro Medicus has been delivering solid returns for years. Can the trend continue?

Read more »