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Takeover target PointsBet Holdings (ASX: PBH) has taken the next step in giving Betr Entertainment (ASX: BBT) a chance at winning the race for control of the online sports-betting group, which at the moment is being led by a $353 million bid from Japanese mobile gaming group MIXI, Inc.
Melbourne-based PointsBet has agreed to mutual due diligence being undertaken by Pointsbet and Betr after determining that it “could reasonably be expected to lead to a superior proposal” to that currently put forward by MIXI.
The cash and scrip offer from Betr is priced at $360 million – a $7 million premium to the existing offer from MIXI.
Betr Entertainment, which is PointsBet’s largest shareholder after acquiring a 19.9 per cent stake in April, plans to raise $130 million to help fund the proposed acquisition of PointsBet which it says delivers “significantly greater value" to PointsBet shareholders than MIXI’s current proposal.
The bid by Betr comprises $260 million in cash and $100 million in Betr scrip, with the effective merger of operations touted by the suitor as providing synergy benefits of more than $40 million a year to PointsBet shareholders.
While PointsBet has opened the door for Betr, the company says it currently “remains committed to, and unanimously recommends, that PointsBet shareholders vote in favour of the MIXI scheme, in the absence of a superior proposal”.
MIXI’s $360 million takeover is a cash offer that PointsBet CEO Sam Swanell has described as “compelling” for shareholders.
The PointsBet board unanimously backed the MIXI bid in February after rejecting an earlier conditional proposal from BlueBet Holdings, which has since been renamed Betr Entertainment, worth up to $361 million.
Betr launched a revised takeover bid for PointsBet after a strong financial performance in the March quarter which saw a 6 per cent lift in “cash active” clients to 152,989 and operating cash flow of $3.3 million for the period.
Betr achieved turnover of $376 million in the March quarter, up from $139.2 million a year earlier, boosting its year-to-date turnover to more than $1 billion.
When announcing Betr’s takeover offer on 29 April, chairman Matthew Tripp warned that the company would be using its current 19.9 per cent shareholding to vote against the MIXI offer, making it harder for the Japanese group to get the deal over the line.
“I am confident PointsBet shareholders will recognise the benefits of our proposal as we work towards again becoming leaders in the Australian wagering market,” Tripp said at the time.
Should Betr succeed in acquiring PointsBet, the combined group would become the fourth-largest wagering group in Australia with a market share of between 10 and 15 per cent.
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