PointsBet Says Some Talks on Sale of US Biz are ‘Well Advanced’

Posted on: April 28, 2023, 03:46h. 

Last updated on: May 1, 2023, 12:18h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

It’s no secret that PointsBet (OTC: PBTHF) is a takeover target. In a new filing with the Australian Securities Exchange (ASX), the gaming company updated investors on plans to possibly sell its North American operations.

PointsBet
PointsBet advertising at the Pepsi Center in Denver. The company said it’s in advanced talks regarding the sale of its US business. (Image: The Business Journals)

Earlier this month, it was reported PointsBet hired investment bank Moelis & Co. to explore a sale of its US and Canadian sports wagering business. The Australia-based sportsbook operator confirmed evaluating strategic alternatives to maximize shareholder value, adding that some related conversations are advanced.

The company is currently in discussion with multiple parties in respect of potential transactions that would involve part or all of our North America business. Certain negotiations are well advanced,” according to the regulatory filing.

PointsBet cautioned investors that there are no guarantees that a transaction will materialize, and that it will remain compliant with Australian financial market disclosure rules by keeping shareholders updated on the talks.

PointsBet Mum on Potential Suitors

PointsBet has long been considered a takeover target, and its market capitalization of $335.70 million makes it highly approachable for any number of prospective suitors.

PointsBet could be an interesting target because it’s established in the attractive US market, despite its small overall market share. Combine PointsBet’s current US licenses and diminutive market value, and it could be an affordable target for a buyer who believes it can expand the operator’s domestic footprint.

None of the names on the list of potential buyers and companies who are in advanced discussions with PointsBet were revealed in the ASX filing. Rumors of a potential sale have been swirling, with names such as Bally’s, Fanatics, and Penn Entertainment mentioned as potential buyers. There’s also been talk that an unidentified private equity company evaluated a bid for PointsBet’s North American arm.

Even if another suitor acquires PointsBet, Penn could benefit, because the regional casino operator owns an equity stake in the Aussie bookmaker.

Late last year, PointsBet was in talks to sell its Australian business. The company has since terminated those negotiations, but said it remains in talks with other third parties that expressed interest in acquiring its Aussie unit.

PointsBet Sources of Allure

While PointsBet has yet to reach profitability in North America, and its share of an ultra-competitive regulated sports betting market is scant, there are points of attraction for bidders.

The company holds a license in Ontario, Canada and is live in Colorado, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Virginia, and West Virginia.

Additionally, it sports topline growth and had $251.7 million in cash as of the end of March, according to the regulatory document.