DraftKings Friday announced it has delivered a letter to the non-executive chairman and CEO of PointsBet setting forth an indicative offer to acquire the company’s U.S. business. The letter states the proposed transaction is an all-cash transaction with a purchase price of $195 million.
DraftKings’ proposal represents a 30% premium to PointsBet’s existing agreement to sell its U.S. business and is subject to conditions described in the letter.
“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,” said DraftKings’ CEO Jason Robins in a statement. “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.”
DraftKings’ proposal represents a 30% premium to PointsBet’s existing agreement to sell its U.S. business and is subject to conditions described in the letter.
“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,” said DraftKings’ Chief Financial Officer Jason Park. “We are excited about the potential synergies available by acquiring PointsBet’s U.S. business, including offering our customers interesting new bet types and accelerating our roadmap of bringing in-house more of our mobile sports betting technology.”
In a note, J.P. Morgan analyst Joseph Greff wrote that although the “potential transaction is small, perhaps the biggest benefit here is that DraftKings protects its market share and prevents a much smaller and relatively new U.S. online sports betting entrant (Fanatics, who earlier made an offer to buy PointsBet for $150 million) from establishing a platform to grow is position in the U.S. OSB market. There are also (smallish) synergy benefits, too, and incremental EBITDA.”
