PointsBet Board Rejects Betr Takeover Offer, Prefers MIXI Deal

It does not appear that an Australian video gaming operator is going to wind up in the hands of Betr.


- PointsBet informs shareholders it prefers to take a deal from Japanese digital and entertainment business MIXI
- The Australian gaming company disagreed with Betr's synergies estimation and "less important" VIP client base
- Betr offered 3.81 per share, equal to 1 PointsBet share, but there are cash certainty concerns


PointsBet's Board all turned down an unsolicited, conditional off-market all-scrip takeover offer from the U.S.-based fantasy and sports wagering operator due to cash certainty issues and "unappealing" elements of Betr's service.


Instead, the Australian and Canadian sportsbook and online gambling establishment owner of BlueBet announced it prefers a deal made by a Japanese digital and home entertainment business.


"The PointsBet Board has figured out, with the assistance of external consultants, that the Betr Proposal is materially inferior to the MIXI Takeover Offer," the company mentioned in a news release.


PointsBet didn't like Betr's characterization of value and pointed to a significantly less monetary offer when computing volume-weighted average costs over pertinent trade rates.


PointsBet was also worried with a potential change in the worth of the scrip offer, due to the low liquidity of Betr's shares. That could lead to an absence of money certainty if PointsBet shareholders chose to offer shares.


Business concerns


Another significant sticking point for PointsBet is the uncertainty of the outcome and timing of Ontario video gaming approvals, which MIXI has currently finished.


PointsBet complained Betr's "less important and unpredictable VIP-heavy client base."


PointsBet said 50% of Betr's win is created from 20 consumers. The a number of "significant risks" from this organization model, including long-lasting sustainability, regulative and compliance concerns, and unpredictable margins.


PointsBet also does not believe Betr's horse-racing model, which represents 85% of its net win, offers the company enough space for growth.


Better offer?


In a proposal made on July 16, Betr used 3.81 of its shares in exchange for each share of PointsBet, claiming a market price of AU$ 1.22 per share, based upon Betr's rate of $0.32.


Betr likewise consisted of $44.9 million in expected yearly cost synergies, which would just be offered if Betr presumes 100% of the company, to reach a prospective PointsBet rate of $1.89 per share. PointsBet doesn't see that as obtainable.


"The worth of the expense synergies identified by Betr has been materially overemphasized, having regard to a number of elements," PointsBet said.


The Japanese company's subsidiary MIXI Australia made an all-cash offer that comes with a $1.20 price per share and an evaluation of $402 million (US$ 206 million), a $49 million worth development over Betr's proposition. MIXI's deal also features a lower investor approval, requiring 50.1% support.


What's next?


Betr, which runs a sportsbook in Ohio and Virginia, hasn't responded to PointsBet's rejection, and it could provide a more pleasing counter-offer to the Australian company.


However, it may not have much time.


"The PointsBet Directors Unanimously recommend that PointsBet shareholders accept the MIXI Takeover Offer, in the absence of superior proposal," the company said.


PointsBet requires 50.1% of backing to finish the deal with MIXI. PointsBet stated it will provide a more in-depth target declaration on why it's proposing to accept MIXI's offer at a later date.