Pointsbet shares charge higher on monster capital return plan

It will be raining cash for this betting company's shareholders soon.

| More on:
a large pile of cash made up of bundled $100 notes is piled against a plain background.

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

Pointsbet Holdings Ltd (ASX: PBH) shares are racing higher on Friday morning.

At the time of writing, the sports betting company's shares are up 6.5% to $1.73.

Why are Pointsbet shares racing higher?

Investors have been scrambling to buy the company's shares this morning after it announced the initial completion of the sale of its US business to Fanatics Betting and Gaming.

This followed the satisfaction of the required conditions, including the requisite US gaming regulatory approvals for the initial transferring states.

According to the release, Pointsbet has received US$175 million (plus agreed adjustments), representing the initial instalment of the headline purchase price of US$225 million.

Following the receipt, it has transferred the operating businesses in eight US states to Fanatics Betting and Gaming. The remaining US state operations will transfer once applicable gaming approvals are obtained.

In addition, ownership of Pointsbet's Advanced Deposit Wagering (ADW) racing business has also transferred to Fanatics.

Capital return

As per previous announcements, Pointsbet intends to return the proceeds from the US business sale to shareholders via two capital return tranches.

The first tranche will see the company return A$315.41 million or A$1 per share.

To put that into context, Pointsbet shares closed at $1.63 on Thursday. This means that the capital return represents a yield of 61.3% based on that close price.

To be eligible to receive this capital return, investors need to own Pointsbet shares before they trade ex-return of capital on 6 September. After which, investors can look forward to receiving this $1 per share payment later this month on 22 September.

Pointsbet is seeking a class ruling from the Australian Taxation Office (ATO) to confirm key Australian tax implications for shareholders receiving both capital returns. However, a final class ruling is not expected to be issued by the tax office until after the scheme is completed.

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

A woman jumps for joy with a rocket drawn on the wall behind her.
Technology Shares

This ASX All Ords share is jumping 15% on big news

This small cap is catching the eye with a big gain today. But why?

Read more »

Hand with AI in capital letters and AI-related digital icons.
AI Stocks

What does this hedge fund giant think about AI shares?

Are AI shares in a hype? Here's what this hedge fund giant thinks.

Read more »

A man holding a mobile phone walks past some buildings
Technology Shares

$10,000 invested in Life360 shares a year ago are now worth

This technology company has been one of the biggest risers over the last 12 months. 

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Industrials Shares

2 rising ASX 200 shares 'largely unaffected' by US tariffs: fundie

ASX 200 shares that are mostly immune to US tariffs may provide more short-term stability in portfolios.

Read more »

A man holds his baby on his lap at the dining room table while he looks at his laptop screen earnestly.
Technology Shares

This is the one Magnificent 7 stock I don't own. Here's why

Passing on this stock has cost me, but I don't regret it.

Read more »

A woman holds a glowing, sparking, technological representation of a planet in her hand.
Technology Shares

These ASX tech shares could be set for a big year

Analysts have good things to say about these top stocks.

Read more »

A group of six work colleagues gather around a computer in an office situation and discuss something on the screen as one man points and others look on with interest
Technology Shares

3 amazing ASX 200 tech shares to buy before it's too late

Analysts are feeling bullish about these names. Let's find out why.

Read more »

Man on his laptop standing next to data centres.
Technology Shares

Can NextDC capitalise on South East Asia's data centre boom?

NextDC’s recent Malaysian contract win represents a significant milestone for the data centre company.

Read more »