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Fanatics acquires PointsBet's U.S. business in $150M deal

Fanatics has acquired the U.S. assets of Australia's PointsBet, the companies announced Sunday. Fanatics/Release
Fanatics has acquired the U.S. assets of Australia's PointsBet, the companies announced Sunday. Fanatics/Release

May 15 (UPI) -- Sports apparel company Fanatics has acquired the U.S. assets of Australia's PointsBet in a $150 million deal, the companies said.

The two companies announced the deal Sunday night in a statement, saying that while the acquisition is not yet completed they are "confident" it will be.

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"Fanatics and PointsBet are excited to enter into an agreement for Fanatics Betting and Gaming to acquire PointsBet's U.S. Business," the companies said.

The deal is subject to several conditions, including PointsBet shareholder and regulatory approvals. PointsBet shareholders will vote on the proposed deal during an expected shareholder meeting to be held late next month.

"Having considered all of the options potentially available to the company, the board believes the Fanatics Betting and Gaming proposal optimizes value for shareholders," PointsBet Chairman Brett Paton said in a statement on Monday.

"The acquisition by Fanatics betting and Gaming of our U.S. business will enable PointsBet to return significant capital to shareholders, while retaining strong Australian and Canadian businesses supported by our leading proprietary technology in a capital light setting."

The Australian sportsbook said distribution of capital is expected to be made to shareholders over two tranches.

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It added that its commercial commitment to NBCUniversal, which acquired a 4.9% interest in PointsBet in 2020, would be transferred to Fanatics in the deal.

The announcement comes after PointsBet forecast a loss of between $77 million and $82 million for the second half of the fiscal year.

In a report on explaining the Fanatics deal on Monday, PointsBet said that while it is the seventh largest online operator in the United States, several risks and capital requirements will prevent it from earning a profit in the North American market in the near term.

It called current market conditions "very challenging," and its forecast to be a reflection of the high costs demanded to operate in a state-by-state regulated environment where there are requirements to pay partner fees in most jurisdictions where they face competition from "well capitalized operators."

"PointsBet's current corporate cash balance is insufficient to fund the U.S. business through to profitability, and as such, should the proposed transaction not proceed, the company would need to raise additional capital in the near term," it said.

"The proposed transaction, therefore, addresses a key uncertainty currently facing the company through removing the need to raise the capital required to fund the U.S. business through to the point at which it becomes a cash flow positive."

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