PointsBet Board Rejects Betr Takeover Offer, Prefers MIXI Deal

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


- PointsBet tells investors it chooses to take a deal from Japanese digital and home entertainment company MIXI
- The Australian video gaming business took problem with Betr's synergies estimate and "less valuable" VIP customer base
- Betr 3.81 per share, equivalent to 1 PointsBet share, but there are money certainty concerns


PointsBet's Board unanimously rejected 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" aspects of Betr's organization.


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


"The PointsBet Board has actually determined, with the help of external advisors, that the Betr Proposal is materially inferior to the MIXI Takeover Offer," the business mentioned in a news release.


PointsBet didn't like Betr's characterization of worth and indicated a considerably less monetary deal when computing volume-weighted typical costs over appropriate trade rates.


PointsBet was also worried about a potential change in the worth of the scrip offer, due to the low liquidity of Betr's shares. That might lead to a lack of cash certainty if PointsBet investors decided to sell shares.


Business issues


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


PointsBet complained Betr's "less valuable and unpredictable VIP-heavy consumer base."


PointsBet said 50% of Betr's win is generated from 20 consumers. The business detailed several "meaningful threats" from this company design, consisting of long-lasting sustainability, regulative and compliance issues, and unforeseeable margins.


PointsBet also doesn't believe Betr's horse-racing model, which represents 85% of its net win, offers the company enough room for development.


Better use?


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


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


"The value of the cost synergies identified by Betr has actually been materially overstated, having regard to a number of elements," PointsBet said.


The Japanese company's subsidiary MIXI Australia made an all-cash deal that features a $1.20 rate per share and an appraisal of $402 million (US$ 206 million), a $49 million worth growth over Betr's proposal. MIXI's offer also includes a lower investor approval, needing 50.1% backing.


What's next?


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


However, it may not have much time.


"The PointsBet Directors Unanimously advise that PointsBet investors accept the MIXI Takeover Offer, in the lack of remarkable proposal," the company said.


PointsBet requires 50.1% of backing to complete the deal with MIXI. PointsBet stated it will supply a more comprehensive target statement on why it's proposing to accept MIXI's offer at a later date.