Report: DraftKings, Fanatics Scrapped Secret Merger Years Earlier than PointsBet Deal
Fanatics declined to touch upon a report that it “secretly held merger” talks with DraftKings two years in the past.
In accordance with two unnamed sources in a New York Submit report, in early 2021, DraftKings and Fanatics had been in “deep talks” on a 50-50 merger with every firm valued at $24 billion. The report comes per week after DraftKings revealed it was making a late $195 million bid to buy PointsBet‘s US property, topping a $150 million proposal from Fanatics made a few month earlier.
DraftKings didn’t instantly reply to LSR’s request for remark. Fanatics declined to remark when reached.
DKNG inventory fell almost two share factors to $25.13 a share simply after the story posted on Friday.
Historical past of DraftKings M&A
This may not be the primary stunted merger between DraftKings and a rival.
In 2017, a merger between FanDuel and DraftKings fell aside after the Federal Commerce Fee sued to dam what they stated would put greater than 90% of the fantasy sports activities market in a single firm’s palms. The businesses agreed to terminate the settlement a few month after the lawsuit. As we speak, they mix for over 60% of the US on-line sports activities betting market.
In a case extra much like the present bidding warfare over PointsBet, in 2021, DraftKings made a $22 billion provide to purchase Entain, doubling a previous bid from MGM Resorts, which splits sports activities betting app BetMGM alongside Entain. The UK-based gaming firm in the end rejected the proposal, which might have created one of many world’s largest gaming corporations.
Report: Robins accused of ‘grudge’
By attempting to accumulate Entain, DraftKings CEO Jason Robins aimed to realize entry to Entain’s expertise, buyer base, and market entry. Some say that’s reverse reasoning behind its PointsBet bid.
Robins has “held a grudge [against Fanatics] ever since” talks with Fanatics dematerialized, an nameless sports activities betting govt informed the New York Submit, including “Jason was stopped and now he’s returning the favor.”
In an announcement to the Submit, DraftKings dismissed these claims, saying the bid is centered round “important synergies and monetary rational” together with product and technological capabilities and “to recommend that there’s an ulterior motive that’s private and never enterprise associated is irresponsible and never grounded in actuality.”
A DraftKings-Fanatics buy would possible block PointsBet from New York, Michigan, New Jersey and Virginia markets on account of their caps on accessible licenses. It might additionally value Fanatics an additional $20 million to launch on-line betting in Illinois.
PointsBet, Fanatics, DraftKings drama
PointsBet introduced it could settle for Fanatics’ provide a couple of weeks after CEO Sam Swanell confirmed it was in search of a purchaser. Then got here DraftKings.
It swooped in with a shock $195 million bid to purchase PointsBet a few month later. In contrast to the retail clothes company-turned sportsbook, DraftKings already has market entry in virtually each state with authorized on-line sports activities betting and has invested tens of millions into its gaming expertise stack.
The rival bid turned on its head what many thought-about a below-expected buy value for Fanatics, which by all accounts would pace up its on-line betting rollout by absorbing PointsBet’s expertise and state licenses.
DraftKings’ proposal is non-binding, which suggests there is no such thing as a assure it should negotiate and execute a purchase order, because the PointsBet board has identified. It’s set to vote on Fanatics’ provide to purchase PointsBet US throughout a shareholder assembly on June 30, with a June 27 deadline looming for DraftKings to agency up its provide.
