DraftKings Inc. (Nasdaq: DKNG) (“DraftKings”) today announced that
it has delivered a letter to both the Non-Executive Chairman and
Chief Executive Officer of PointsBet Holdings Ltd. (“PointsBet”)
setting forth an indicative offer to acquire PointsBet’s U.S.
business in an all-cash transaction with a purchase price of $195
million (the “Proposed Transaction”). DraftKings’ proposal
represents a 30% premium to PointsBet’s existing agreement to sell
its U.S. business and is subject to the conditions described in the
letter.
“While we continue to focus on operating more
efficiently and driving substantial organic revenue growth in the
United States, we will also look to prudently capitalize on
compelling opportunities at attractive valuations, as is the case
with PointsBet’s U.S. business,” said Jason Robins, DraftKings’
Chief Executive Officer and Co-founder. “We believe DraftKings is
uniquely positioned to submit this superior proposal due to our
scale and corresponding ability to generate meaningful synergies
from the acquisition.”
“We expect this transaction to increase our
Adjusted EBITDA potential in 2025 and beyond and not impact our
expectations of achieving positive Adjusted EBITDA in 2024,” said
Jason Park, DraftKings’ Chief Financial Officer. “We are excited
about the potential synergies available by acquiring PointsBet’s
U.S. business, including offering our customers interesting new bet
types and accelerating our roadmap of bringing in-house more of our
mobile sports betting technology.”
The full text of DraftKings’ letter to both the
Non-Executive Chairman and Chief Executive Officer of PointsBet is
provided below:
June 15, 2023
Mr. Brett Paton, Non-Executive Chairman of the
BoardMr. Sam Swanell, Chief Executive OfficerPointsBet Holdings
Ltd.Level 2 165 Cremorne StreetCremorne, VIC 3121, Australia
Re: Indication of Interest in the
Acquisition of PointsBet’s US Business
Dear Brett and Sam:
On behalf of DraftKings Inc. (“DraftKings”,
“we”, “us” and “our”), I am submitting this indicative offer (the
“Indicative Offer”) to acquire the United States online sports
betting, iGaming and retail sportsbook business (“US Business”) of
PointsBet Holdings Ltd. (“PointsBet”) on the terms and conditions
described below (the “Proposed Transaction”).
While we understand that PointsBet is currently
party to a Stock and Equity Sale Agreement (the “Existing
Agreement”) with Fanatics Betting and Gaming (“Fanatics”) for the
sale of the US Business, our Indicative Offer and the Proposed
Transaction delivers a significant premium to Fanatics’ offer for
the US Business, and we believe that your board of directors will
agree that it constitutes a Superior Proposal as defined under your
Existing Agreement, both due to the value it would deliver to your
shareholders and our expected ability to consummate the Proposed
Transaction more quickly with improved consideration and otherwise
on terms that are substantially similar to those you have agreed
with Fanatics.
Key Elements of the Indicative Offer
& Proposed Transaction
The terms and conditions of our Indicative Offer
and the Proposed Transaction are as follows:
- Transaction
Perimeter and Structure: We propose to acquire the US Business
under terms and conditions (other than the more attractive proposed
consideration) that are substantially consistent with your Existing
Agreement with Fanatics, as described in Annexure A of your May 15,
2023 press release.
- Purchase Price
and Consideration: We are offering to acquire the US Business for
USD $195 million in cash, on a debt-free and cash-free basis. Our
Indicative Offer represents a 30% premium to Fanatics’ proposal of
USD $150 million under the Existing Agreement.
- Financing: The
Proposed Transaction will not be subject to any financing
condition, as DraftKings would complete the Proposed Transaction
using cash from its balance sheet and does not need to raise any
additional capital.
- Required
Approvals and Timeline to Closing: DraftKings expects that
customary regulatory approvals, including the approval of gaming
regulators in relevant U.S. jurisdictions, will be required in
connection with the Proposed Transaction. As a licensed entity in
all of the jurisdictions in which you operate the US Business, we
believe that we are uniquely positioned to obtain the requisite
regulatory approvals on a more expedient timeframe than under your
Existing Agreement with Fanatics. This higher level of deal
certainty and speed to completion will enable PointsBet to return
capital to its shareholders more quickly, which represents another
reason that our Indicative Offer is superior to your Existing
Agreement with Fanatics.
- Internal
DraftKings Approvals and Conditions: Our Indicative Offer has the
full support of the highest levels of our organization. Our
Transaction Committee and executive leadership team have been
informed of this Indicative Offer and are enthusiastically
supportive. However, as is customary, DraftKings’ entry into
definitive agreements will be subject to the satisfactory
completion of our reasonable due diligence, the negotiation of
mutually acceptable transaction documentation and final internal
approvals.
- Due Diligence;
Timeline to Signing a Definitive Agreement: Given the due diligence
work already performed based on publicly available information, we
are prepared to move forward quickly and efficiently with a
targeted due diligence process. Subject to prompt access to
management and requested information, we are confident that due
diligence could be completed and definitive agreements executed in
approximately three weeks.
We believe that this Indicative Offer
constitutes a Superior Proposal, such that PointsBet may engage
with us towards the consummation of the Proposed Transaction
consistent with its obligations under the Existing Agreement with
Fanatics.
Transaction Rationale
DraftKings is uniquely positioned to submit this
Superior Proposal due to the substantial synergies that we expect
to be able to capture by combining your US Business with our scaled
position in the United States. Further, we believe the Proposed
Transaction would create value for DraftKings in several ways,
including:
- Enhanced
Product: DraftKings will benefit from PointsBet’s product
capabilities, such as its unique “pointsbetting” functionality,
which will further our product differentiation and drive increased
engagement for existing and new users;
- Additional
In-House Capabilities: PointsBet’s technology will bring further
trading capabilities in-house for DraftKings, which will drive
increased margins by eliminating certain external supplier costs;
and
- Considerable
Synergies: DraftKings will be able to capture significant synergies
through improved customer acquisition and monetization, marketing
efficiencies, and fixed cost rationalization.
Advisors
DraftKings has engaged BofA Securities and The
Raine Group, as our financial advisors, and Sullivan & Cromwell
LLP, as our legal counsel, in each case in connection with the
Proposed Transaction.
Legal Matters
As is customary, this letter is intended to
convey DraftKings’ non-binding interest in the Indicative Offer and
Proposed Transaction and does not constitute a binding offer or
commitment on the part of DraftKings to negotiate or execute a
definitive agreement with respect thereto. The failure of
DraftKings or PointsBet, for any reason, to proceed with
negotiating or executing definitive agreements will not impose any
liability on such party or any of its equity holders.
Our Superior Proposal
We would like to reiterate that DraftKings is
fully committed to pursuing the Proposed Transaction. We are
convinced that our Indicative Offer presents a superior financial
outcome for PointsBet shareholders with a clear path to
consummation. We, therefore, strongly believe that a successful
transaction on the basis of our Indicative Offer represents a truly
compelling opportunity for all parties involved and would be in the
best interests of PointsBet and its shareholders and other
stakeholders.
We expect that PointsBet’s board of directors
will wish to consider the contents of this letter and to discuss it
with its financial and legal advisors. In the meantime, should you
or your advisors wish to clarify or discuss any aspect of this
letter or our Indicative Offer, please either contact me or invite
your advisors to contact Chris Cormier ((646) 855 4244) of BofA
Securities or John Salter ((415) 254-9244) of The Raine Group.
I very much look forward to meeting with you to
discuss this exciting Indicative Offer, including any ideas you may
have to make this process as fast and efficient as possible.
Very truly yours,
Jason RobinsChief Executive Officer and Chairman
About DraftKingsDraftKings Inc.
is a digital sports entertainment and gaming company created to
fuel the competitive spirit of sports fans with products that range
across daily fantasy, regulated gaming and digital media.
Headquartered in Boston, and launched in 2012 by Jason Robins, Matt
Kalish and Paul Liberman, DraftKings is the only U.S.-based
vertically integrated sports betting operator. DraftKings’ mission
is to make life more exciting by responsibly creating the world’s
favorite real-money games and betting experiences. DraftKings
Sportsbook is live with mobile and/or retail sports betting
operations pursuant to regulations in 23 states and in Ontario,
Canada. The Company operates iGaming pursuant to regulations in 5
states and in Ontario, Canada under its DraftKings brand and
pursuant to regulations in 3 states under its Golden Nugget Online
Gaming brand. DraftKings’ daily fantasy sports product is available
in 44 states, certain Canadian provinces and the United Kingdom.
DraftKings is both an official daily fantasy and sports betting
partner of the NFL, NHL, PGA TOUR and UFC, as well as an official
daily fantasy partner of NASCAR, an official sports betting partner
of the NBA and an authorized gaming operator of MLB. Launched in
2021, DraftKings Marketplace is a digital collectibles ecosystem
designed for mainstream accessibility that offers curated NFT drops
and supports secondary-market transactions. In addition, DraftKings
owns and operates Vegas Sports Information Network (VSiN), a
multi-platform broadcast and content company. DraftKings is
committed to being a responsible steward of this new era in
real-money gaming with a company-wide focus on responsible gaming
and corporate social responsibility.
Forward-Looking
StatementsCertain statements made in this press release
are “forward looking statements” within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995. When used in this press
release, the words “estimates,” “projected,” “expects,”
“anticipates,” “forecasts,” “plans,” “intends,” “believes,”
“seeks,” “may,” “will,” “would,” “should,” “future,” “propose” and
variations of these words or similar expressions (or the negative
versions of such words or expressions) are intended to identify
forward-looking statements. These forward-looking statements
include statements about the proposed and expected terms of the
Proposed Transaction; the entry into definitive agreements
regarding the Proposed Transaction; the ability of DraftKings to
complete the Proposed Transaction, particularly given PointsBet’s
existing agreement to sell its U.S. business to a third party; the
expected timing of the completion of the Proposed Transaction,
including the ability of DraftKings and PointsBet to obtain
requisite regulatory approvals for the Proposed Transaction; the
expected benefits and costs of the Proposed Transaction, including
potential synergies; management plans relating to the Proposed
Transaction; and the plans, strategies and objectives of management
for future operations of PointsBet’s U.S. business, including the
execution of such plans. Such forward-looking statements are not
guarantees of future performance, conditions or results, and
involve a number of known and unknown risks, uncertainties,
assumptions and other important factors, many of which are outside
DraftKings’ control, that could cause actual results or outcomes to
differ materially from those discussed in the forward-looking
statements. For a discussion of additional risks and uncertainties,
which could cause actual results to differ from those contained in
the forward-looking statements, see DraftKings’ filings with the
U.S. Securities and Exchange Commission. DraftKings does not
undertake any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
Media:media@draftkings.com@DraftKingsNews
Investors:Investors@draftkings.com
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/60fd30ae-12d5-40b9-a15a-7e1675910736
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