Directors at PointsBet Firmly Decline Betr Agreement, Reinforce Backing for MIXI Plan
In a significant development, Australian-based betting company PointsBet has expressed its preference for the all-cash takeover offer from Japanese tech giant MIXI, over an all-scrip offer from Betr.
MIXI's offer, valued at AUD 1.20 per PointsBet share, represents an immediate and less risky payout for shareholders, providing a significant premium over PointsBet's February closing price. This bid, which values PointsBet's equity at around AUD 460 million, has garnered unanimous support from PointsBet's board.
In contrast, Betr's offer involves an exchange of 3.81 Betr shares for each PointsBet share, a deal heavily dependent on stock value fluctuations and synergies. PointsBet's board has flagged concerns about the significant value in synergies claimed by Betr as "materially overstated."
The key differences between the two offers are outlined in the table below:
| Feature | MIXI Offer | Betr Offer | |------------------------|---------------------------------------------|-----------------------------------------------| | Offer Type | **All-cash offer** (AUD 1.20 per share) | **All-scrip offer** (3.81 Betr shares per PointsBet share) | | Value Certainty | High (immediate cash payment) | Low (dependent on stock price and synergy assumptions) | | Valuation | AUD 460 million equity value (~AUD 402 million enterprise value) | Roughly AU$1.22 per PointsBet share, but 57% cash, 43% scrip | | Risk | Lower risk, less integration challenges | Higher risk due to volatile customer base and integration issues | | Shareholder Support | Pre-bid agreements for 17.18% of shares | No pre-bid stake to facilitate takeover vote | | Board Preference | Unanimous support | Rejected due to less favorable terms |
PointsBet's leadership has also expressed concerns about Betr's business model being riskier, with potential revenue disruptions and high levels of customer churn. The company's volatile VIP-heavy customer base and unattractive product mix further add to these concerns.
MIXI Australia, with a 9.15% pre-bid stake in PointsBet, is now participating in the vote. The board urges existing PointsBet shareholders to accept the MIXI takeover offer, arguing that it represents a superior proposal.
The Betr scrip offer, which is highly conditional and requires Betr shareholder approval and Ontario gaming approvals, has been rejected by PointsBet. Acceptance of this offer would expose PointsBet shareholders to Betr's business, potentially leading to integration challenges and potential cannibalization of revenues due to high levels of customer cross-over.
The MIXI takeover offer is now open for acceptance. Shareholders are encouraged to carefully consider the advantages of the simpler, certain, and less risky cash offer over the more complex and riskier scrip bid.
Investing in PointsBet may find the all-cash takeover offer from MIXI more appealing, as it provides an immediate and less risky payout for shareholders, offering a significant premium over PointsBet's February closing price. On the other hand, sports betting enthusiasts might recognize that the investing landscape could change drastically if PointsBet were to accept Betr's all-scrip offer, given the potential integration challenges and customer revenue disruptions associated with Betr's business model.
