PointsBet has once again said “thanks, but no thanks” to its fellow Australian sportsbook Betr, which has a plan to sell PointsBet Canada’s operations.
Ontario-licensed PointsBet unanimously rejected Betr’s latest takeover proposal on the basis that it is worth “materially less” than the increased off-market offer from Japanese entertainment and technology firm MIXI, which officially opened this week. PointsBet rejected Betr’s first offer for the same primary reason.
Betr filed its latest bid last week and claimed that it was “superior” to MIXI’s.
But a key point of contention for PointsBet, whose board has recommended that company shareholders accept the MIXI bid, is that Betr’s offers are funded via shares rather than cash. Betr posited that its proposal to exchange 3.81 of its own shares in exchange for every PointsBet share equated to AU$1.22 per PointsBet share, and its offer also included a theoretical AU$44.9 million of expected annual cost synergies. Betr said that represented a value of AU$1.89 per PointsBet share.
Sports betting-only in Australia, PointsBet also offers online casino gaming in Ontario’s regulated market and intends to seek a licence in Alberta when that province opens up to commercial iGaming next year.
Betr has a non-binding agreement in place with Hard Rock Digital to sell PointsBet’s “loss-making” Canadian operations for around C$40.5 million, including all current and future provincial operating licenses, all Canadian customer databases and intellectual property and any Canadian-specific technology assets and platforms.
The attraction’s just not there
However, in a response issued this week, PointsBet’s leadership expressed several reasons it had no interest in accepting Betr’s offer.
Firstly, it noted that Betr’s share-dependent offer would likely change in value over time as the price of stocks fluctuated.
It also wrote that Betr has a “less valuable and volatile VIP-heavy customer base” and a “sub-scale” betting business that is 85% horse racing in terms of net win, both of which it deemed unattractive propositions.
There’s also the fact that, as two Australia-first sportsbooks, there is thought to be a high level of existing customer crossover between the two brands that could reduce cost benefits to shareholders. PointsBet claimed that due diligence found that 85% of Betr’s net win comes from horse racing, while 65% of PointsBet and Betr’s aggregate net win comes from customers who have an account on both sportsbooks.
PointsBet also alleged in a filing that Betr generated more than half of its gambling profits from just 20 customers in January and wrote that a VIP-heavy player base posed risks including around compliance and regulation.
Finally, the company reiterated its argument that Betr’s proposed cost synergies are “materially overstated” due to the investment that would be required.
PointsBet fixated on MIXI
PointsBet again unanimously recommended that shareholders vote in favour of MIXI’s all-cash takeover, which now requires just 50.1% shareholder approval after moving from on-market to off-market.
Per Australian media, MIXI has already secured acceptances of more than 17% through shares held by PointsBet directors and pre-bid agreements with certain stakeholders. PointsBet confirmed that MIXI already owns 9.15% of its shares, while Betr owns around 19%.
The potential MIXI acquisition has also already received all necessary gaming regulatory approvals, getting the green light in Australia and from the Alcohol and Gaming Commission of Ontario (AGCO).
