Fanatics pounces for PointsBet’s US business in $150m deal
Operator to retain Canadian and Australian trading business as well as technology assets as board greenlights multi-million-dollar deal
PointsBet has confirmed the sale of its US business to Fanatics Betting and Gaming (FBG) for a fee of A$222m ($150m).
The ASX-listed operator revealed terms of the sale on Monday morning, with PointsBet retaining its Australian and Canadian trading businesses, as well as its proprietary sports wagering, racing and igaming platform.
It is expected that these businesses will be at or around EBITDA breakeven on a standalone basis.
The company will retain technologists, traders and quants based in Australia, Canada, and India, with these employees being used to augment the Australian and Canadian trading businesses.
PointsBet will also keep hold of a perpetual, royalty-free license to exploit assets from the Banach Technology business (including the underlying source code driving OddsFactory), with an option to utilize these assets outside the US.
On completion, the firm will be able to continue to exploit both platforms in all geographic regions, except in the US for an 18-month period.
As part of the arrangements agreed, PointsBet will provide services to FBG prior to the final closing of the deal and be reimbursed for the cost of these services by FBG.
PointsBet will provide $21m in funding for the US business from the conclusion of the shareholder meeting in late June to approve the deal, through to the completion of the transaction.
PointsBet’s board of directors have already indicated their unanimous support for the deal.
Elsewhere, PointsBet’s existing agreements with NBCUniversal will be transferred to FBG ownership on completion of the deal, with the final payment due from PointsBet to NBC included in this funding amount.
“NBCUniversal has also released PointsBet Holdings Limited from its guarantee obligations under its Media Services Agreement from final completion, and has irrevocably waived its right to exercise the equity options previously issued. These options have been terminated today,” PointsBet confirmed.
PointsBet has said it will distribute the net sale proceeds, together with the “majority” of its corporate cash reserves, to its shareholders via two separate tranche payments to be made near completion.
PointsBet triggered a strategic review of its businesses earlier this month, with the firm first looking at divesting its flagship Australian business, before switching focus to a potential US sale.
While PointsBet has been financially successful in the US, generating significant quarterly growth and expanding into several US states, it has proven an expensive avenue for the firm, with PointsBet indicating its inability to provide funding to the US business over the longer term via its corporate balance sheet.
PointsBet managing director and group CEO Sam Swanell highlighted these costs in his remarks about the deal.
“Despite the strategic success building a valuable asset in the US, the costs of operating in a state-by-state environment, together with the requirement to build significant scale to compete against well-capitalized operators, led us to explore a number of options,” Swanell said.
“The sale of the US business to Fanatics Betting and Gaming delivers the most attractive risk-adjusted value outcome for shareholders compared to the risks and benefits of other options including the status quo.”
“Fanatics Betting and Gaming has recognized our strategy, technology, and team as a platform for their own expansion in the online sports betting and igaming market. Given Fanatics’ significant presence in the US sports market, we consider them to be a natural acquirer of our US business,” he concluded.