A leading sports betting company revealed its acquisition plans on Friday morning. Although, the target company already has an existing purchase offer from a competing firm.
What Happened: Sports betting and iGaming company DraftKings Inc DKNG announced on Friday its intent to acquire the U.S. business of PointsBet PBTHF. The acquisition offer comes after Fanatics previously agreed to buy the business.
DraftKings is offering $195 million cash to acquire the PointsBet U.S. business, which offers a 30% premium to the Fanatics previous offer.
“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,” DraftKings CEO Jason Robins said.
A letter to PointsBet said it believed the deal could be completed in three weeks.
PointsBet is a leading U.S. sports betting operator and has a top 10 market share position in several states.
Related Link: Exclusive: DraftKings CEO Says We're Seeing Really Strong Trends After Q1 Beat, Guidance Raise
Why It’s Important: The acquisition of PointsBet’s U.S. business could continue to scale the DraftKings business and also accelerate its path to profitability.
“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,” DraftKings Chief Financial Officer Jason Park said. “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.”
DraftKings highlighted the investment case for the acquisition in its letter to PointsBet. The company sees the deal enhancing its product, adding in-house capabilities, and offering “considerable synergies.”
Fanatics is considered to be one of the biggest upstart competitors in the sports betting space given its existing customer list from other businesses, partnerships with teams and leagues, and strong financing and financials.
Fanatics launched online sports betting in Tennessee, Maryland, Massachusetts and Ohio earlier this year.
DKNG Price Action: DraftKings shares are up 0.4% to $24.94 during early trading on Friday. Shares are up over 100% year-to-date in 2023.
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