PointsBet ‘unanimously’ rejects Betr offer as MIXI bid advances

PointsBet has formally rejected a takeover proposal from Betr Entertainment and thrown its backing behind an improved offer from MIXI Australia.

Betr and MIXI have been battling it out for several months in an attempt to take ownership of PointsBet. However, the race now appears to have reached a conclusion, with the PointsBet board turning down Betr’s proposal.

Detailing its decision, PointsBet said an improved offer from MIXI, presented earlier in June, was seen as “superior”. MIXI’s takeover proposal was valued at AU$402 million (US$261 million), which surpassed a rival offer from Betr.

Should the deal proceed, PointsBet shareholders will receive $1.20 for each share they hold in the company. This represents a 44.6% premium on the 25 February closing price of $0.83, and improved upon the $1.06 per share proposal that had already been approved by the PointsBet board in February.  

As such, PointsBet has entered a bid implementation deed with MIXI, setting out specifics of the offer. These include that any takeover would be subject to a 50.1% minimum acceptance from shareholders and regulatory approval in Ontario, Canada, PointsBet’s remaining international market after selling its US operations to Fanatics in April last year.

Last week, it was confirmed Australia’s Foreign Investment Review Board had already approved the mooted takeover. This ticked off another condition of the deal.

PointsBet shareholders are scheduled to vote on the MIXI offer on 25 June. The company said it will publish further updates as and when they become available.

Why did PointsBet reject Betr?

At one point, Betr was declared the frontrunner in the race to take control of PointsBet. In May, the PointsBet board announced Betr’s proposal as “superior”, with this seemingly having pushed MIXI into improving its own offer.

However, just a few weeks later, Betr looks set to fall by the wayside with its offer being rejected. As to why Betr’s proposal fell short, PointsBet set out several reasons. This followed its due diligence on the offer.

Firstly, the total value of the Betr offer fell short of MIXI’s improved bid tabled earlier in June. Betr’s proposal was worth approximately $360 million, around $42 million shy of the fresh MIXI offer.

Betr ‘materially overstated’ cost synergies

PointsBet’s due diligence also considered the longer-term implications of the proposal. The company picked out the value of cost synergies stated by Betr were “materially overstated” due to the level of brand and digital investment that would have been required as part of the forward business plan.

PointsBet also noted high levels of customer crossover between PointsBet and Betr, as well as customer behaviour, meant it risked cannibalising its own revenue.

In addition, it flagged “significant integration and implementation challenges” with the Betr proposal. It said how Betr assumed PointsBet’s Canadian business could have been carved out and large synergies realised. However, PointsBet said that this would likely have further reduced the overall achievability of synergies.

“The board notes its own assessment of the value of the proposal differs materially to that of Betr,” PointsBet said. “The key reason for the difference in value is the calculations underpinning Betr’s value are reliant on a number of assumptions that PointsBet considers to be unrealistic.”

Betr, previously known as BlueBet Holdings before rebranding, is yet to comment on the decision.