PointsBet Board Rejects Betr Takeover Offer, Prefers MIXI Deal

It doesn't appear that an Australian gaming operator is going to end up in the hands of Betr.


- PointsBet informs investors it to take a deal from Japanese digital and home entertainment business MIXI
- The Australian gaming business differed with Betr's synergies estimate and "less valuable" VIP client base
- Betr provided 3.81 per share, equal to 1 PointsBet share, but there are money certainty concerns


PointsBet's Board unanimously declined 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 "unsightly" elements of Betr's company.


Instead, the Australian and Canadian sportsbook and online casino owner of BlueBet revealed it prefers an offer made by a Japanese digital and entertainment business.


"The PointsBet Board has actually determined, with the support 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 worth and indicated a substantially less monetary deal when determining volume-weighted average prices over relevant trade costs.


PointsBet was likewise concerned with a prospective modification in the worth of the scrip deal, due to the low liquidity of Betr's shares. That might lead to a lack of cash certainty if PointsBet investors chose to sell shares.


Business problems


Another major sticking point for PointsBet is the unpredictability of the outcome and timing of Ontario gaming approvals, which MIXI has already completed.


PointsBet took exception to Betr's "less valuable and unstable VIP-heavy consumer base."


PointsBet said 50% of Betr's win is generated from 20 consumers. The business detailed a number of "meaningful risks" from this service model, consisting of long-lasting sustainability, regulative and compliance issues, and unpredictable margins.


PointsBet also doesn't think Betr's horse-racing design, which represents 85% of its net win, offers the company enough room 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 price of $0.32.


Betr also consisted of $44.9 million in expected yearly expense synergies, which would just be readily available if Betr assumes 100% of the business, to reach a prospective PointsBet rate of $1.89 per share. PointsBet does not see that as obtainable.


"The value of the expense synergies determined by Betr has actually been materially overstated, having regard to a variety of aspects," PointsBet stated.


The Japanese business's subsidiary MIXI Australia made an all-cash deal that comes with a $1.20 cost per share and an evaluation of $402 million (US$ 206 million), a $49 million value growth over Betr's proposal. MIXI's offer likewise includes a lower shareholder approval, needing 50.1% backing.


What's next?


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


However, it might not have much time.


"The PointsBet Directors Unanimously advise that PointsBet shareholders accept the MIXI Takeover Offer, in the lack of exceptional proposition," the company stated.


PointsBet needs 50.1% of backing to complete the handle MIXI. PointsBet said it will offer a more in-depth target statement on why it's proposing to accept MIXI's deal at a later date.