Someone is going to buy online sports betting and online casino operator PointsBet. Who that will be remains the question.
While the company’s board has unanimously recommended that shareholders approve a tabled offer from Japanese technology and entertainment firm MIXI, PointsBet’s fellow Australian sportsbook (and largest individual shareholder) Betr has returned with a new proposal.
On Wednesday, July 16, Betr tabled an all-share, off-market offer it says is worth up to $1.89 AUD per share and which it claims is “superior” to MIXI’s all-cash bid.
The bid is $1.22 AUD per PointsBet share, plus up to $0.67 AUD in addition per share in potential cost synergies. Betr stated on Wednesday that this would far exceed the proposal put forward by MIXI, which is $1.20 AUD per share, albeit all in cash.
Betr has pledged 3.81 of its own shares in exchange for every PointsBet share that it does not already own. Betr holds a 19.6% stake in PointsBet.
“PointsBet shareholders can benefit from additional, longer-term value upside and potential re-rating from the Betr management team’s unparalleled record of success, and the advantages of scale in a fast-consolidating market, as Australia’s only ASX-listed, pure-play digital wagering operator, with increased institutional investment appeal and pathway for ASX 300 index inclusion,” noted Betr’s updated offer.
However, in a statement on Thursday, July 17, PointsBet contended that the Betr offer is actually only worth $1.03 AUD per share based on trading prices, and urged shareholders to take no action on the new offer.
MIXI files again after failing shareholder majority test
Betr’s new all-share offer comes weeks after MIXI ‘s on-market bid failed to gain a shareholder majority amid chaos in late June.
Initially, the vote appeared to have approved the takeover, but it quickly became apparent that Betr had not voted. PointsBet first suggested that Betr had not filed its proxy, but Betr contested that claim and demanded a recount. Ultimately, PointsBet confirmed that Betr’s vote was unintentionally excluded due to a system error by share registry company Computershare.
A recount showed that the MIXI bid received 70% backing, below the 75% required to pass decisions at the shareholder level.
In a statement after PointsBet had confirmed the error, Betr accused the company it wants to buy of “unprofessional and irresponsible” conduct, adding that it is concerned that the PointsBet board is seeking to transfer control to MIXI “without allowing a genuine contest to take place.”
MIXI subsequently submitted an alternative off-market all-cash takeover offer of $1.20 AUD per PointsBet share, which amounts to the same $402 million AUD total valuation of its on-market offer. That bid would require a 50.1% minimum acceptance from PointsBet shareholders. MIXI has already secured 17.2% acceptance via shares held by PointsBet directors and pre-bid agreements with management firms.
MIXI filed its bidder’s statement on Thursday, July 17, and PointsBet’s board unanimously recommends that shareholders accept it.
So, what about PointsBet Canada?
MIXI’s attempt to buy PointsBet has also already satisfied all gaming regulatory approvals, getting the thumbs-up from Australia’s Foreign Investment Review Board and, this month, from Ontario’s market regulator the Alcohol and Gaming Commission of Ontario (AGCO).
PointsBet is purely a sportsbook in its home country. In its only other market, Ontario, it offers both online sports betting and online casino gaming. It intends to seek a licence in Alberta when that province opens up to commercial iGaming next year.
However, Betr’s offer for PointsBet in late April included a note that it had struck a non-binding proposal for Hard Rock Digital to acquire “certain assets which relate to PointsBet’s Canadian operations.”
Betr’s latest bidder’s statement, dated July 16, confirmed the Hard Rock agreement remains in place, valued at around $29.6 million USD ($40.5 million CAD). It also detailed that Betr “intends to divest PointsBet’s Canadian operations to focus the PointsBet business on the Australian market.”
Noting that PointsBet Canada’s operations are “loss-making,” Betr said it would sell:
- PointsBet’s Ontario iGaming licence and operations
- All Canadian customer databases and intellectual property
- Any other Canadian provincial licences or applications
- Canadian-specific technology assets and platforms.
The proceeds from this divestment would be used to strengthen PointsBet’s position in the Australian market and reduce debt. The offer is not binding, but Betr and Hard Rock have agreed to a period of exclusivity to pursue the sale.
Betr noted that, based on advice from its own Canadian legal counsel, it expects that PointsBet Canada’s existing operator agreement with iGaming Ontario (iGO) would carry over to Betr were the company’s takeover approved.
