The board of PointsBet has announced its intention to explore a last-minute offer by DraftKings while continuing to recommend the bid from Fanatics, at least for now. PointsBet, an Australian company, issued a press release stating that it will engage in discussions with DraftKings regarding its $195 million offer to purchase PointsBet’s US assets. However, since the DraftKings offer is non-binding, PointsBet’s board maintains its recommendation for shareholders to approve the earlier $150 million offer from Fanatics, pending the outcome of the negotiations with DraftKings.

PointsBet’s directors, after consulting with the company’s financial and legal advisors, have determined that the DraftKings proposal could potentially lead to a superior proposal, as defined in the company’s previous ASX release.

Following this announcement, PointsBet’s stock experienced an upward bounce in Australia on slightly higher than average trading volume.

PointsBet also sent a letter to DraftKings CEO Jason Robins outlining the next steps for the companies to engage in the potential transaction. The requests made in the letter are typical for major M&A transactions, including a non-disclosure agreement (NDA), a clean team for facilitating information exchange, and a virtual data room for due diligence. Additionally, PointsBet requests written confirmation from DraftKings that they will assume the risk of any delays or denials of antitrust approvals, as PointsBet intends to hold DraftKings to a “hell or high water” standard regarding antitrust clearances.

PointsBet has set a deadline of June 27 for DraftKings to present a firm offer, which aligns with the due diligence process. This quick turnaround is necessary because PointsBet shareholders are scheduled to vote on the Fanatics offer on June 30. Previously, eight of the top 10 PointsBet shareholders had recommended accepting the Fanatics offer. However, their alignment occurred before the emergence of DraftKings’ higher bid, which could complicate Fanatics’ entry into the US market by outbidding its billionaire owner, Michael Rubin.

Fanatics’ interest in acquiring PointsBet stems from PointsBet’s struggles to gain significant market share in the US sports betting market since its launch in 2018. While PointsBet viewed its success in the Australian market as a proof of concept, it faced strong competition from better-funded operators like FanDuel, resulting in low single-digit market share. Fanatics, with ample funding from its apparel business, has been building its betting operation and sees the purchase of PointsBet primarily as a means to reduce market-access costs. By leveraging PointsBet’s existing footprint, Fanatics can avoid paying upfront license fees again when entering those markets, potentially saving tens of millions of dollars.