PointsBet Board Rejects Betr Takeover Offer, Prefers MIXI Deal

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


- PointsBet tells shareholders it prefers to take a deal from Japanese digital and home entertainment business MIXI
- The Australian video gaming company differed with Betr's synergies estimate and "less valuable" VIP customer base
- Betr offered 3.81 per share, equivalent to 1 PointsBet share, however there are cash certainty issues


PointsBet's Board unanimously 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" aspects of Betr's company.


Instead, the Australian and Canadian sportsbook and online gambling establishment owner of BlueBet revealed it chooses an offer made by a Japanese digital and home entertainment company.


"The PointsBet Board has determined, with the support of external advisors, that the Betr Proposal is materially inferior to the MIXI Takeover Offer," the business specified in a press release.


PointsBet didn't like Betr's characterization of worth and indicated a substantially less financial offer when determining volume-weighted typical rates over appropriate trade costs.


PointsBet was also interested in a potential modification in the value of the scrip deal, due to the low liquidity of Betr's shares. That could lead to an absence of cash certainty if PointsBet investors chose to offer shares.


Business concerns


Another major sticking point for PointsBet is the uncertainty of the result and timing of Ontario gaming approvals, which MIXI has already finished.


PointsBet complained Betr's "less valuable and unstable VIP-heavy client base."


PointsBet stated 50% of Betr's win is produced from 20 clients. The business detailed a number of "significant risks" from this organization design, including long-lasting sustainability, regulatory and compliance concerns, and unforeseeable margins.


PointsBet also doesn't think Betr's horse-racing design, which represents 85% of its net win, gives the company enough room for growth.


Better provide?


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


Betr also consisted of $44.9 million in anticipated annual expense synergies, which would just be available if Betr assumes 100% of the company, to reach a prospective PointsBet price of $1.89 per share. PointsBet doesn't see that as attainable.


"The value of the expense synergies identified by Betr has been materially overstated, having regard to a number of aspects," said.


The Japanese business's subsidiary MIXI Australia made an all-cash deal that includes a $1.20 rate per share and a valuation of $402 million (US$ 206 million), a $49 million worth growth over Betr's proposition. MIXI's offer likewise comes with a lower shareholder acceptance, requiring 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 provide a more pleasing counter-offer to the Australian business.


However, it might not have much time.


"The PointsBet Directors Unanimously recommend that PointsBet investors accept the MIXI Takeover Offer, in the lack of superior proposition," the company said.


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