PointsBet Says Some Talks on Sale of US Biz Are ‘Well Advanced’

It’s no secret that PointsBet (OTC: PBTHF) is a takeover target. In a new filing with the Australian Securities Exchange (ASX), the gaming company updated investors on plans to possibly sell its North American operations.

PointsBet advertising at the Pepsi Center in Denver. The company said it’s in advanced talks regarding the sale of its US business. (Image: The Business Journals)

Earlier this month, it was reported PointsBet hired investment bank Moelis & Co. to explore a sale of its of US and Canadian sports wagering business. The Australia-based sportsbook operator confirmed it’s evaluating strategic alternatives in an effort to maximize shareholder value, adding that some of the related conversations are advanced.

The company is currently in discussion with multiple parties in respect of potential transactions that would involve part or all of our North America business. Certain negotiations are well advanced,” according to the regulatory filing.

PointsBet cautioned investors that there are no guarantees a transaction will materialize and that will remain in compliance with Australian financial market disclosure rules by keeping shareholders updated on the talks.

PointsBet Mum on Potential Suitors

PointsBet has long been considered a takeover target and its market capitalization of $335.70 million makes it highly approachable for any number of prospective suitors.

PointsBet could be an interesting target because it’s established in the attractive US market, despite its small overall market share. Combine PointsBet’s current US licenses and its diminutive market value, and it could be an affordable target for a buyer that believes it can expand the operator’s domestic footprint.

Regarding the list of potential buyers and the companies with which PointsBet’s discussions are advanced, no such names were revealed in the ASX filing. Rumors to that effect have been swirling for some time with names such as Bally’s, Fanatics and Penn Entertainment mentioned as potential buyers. There’s also been talk that an unidentified private equity company evaluated a bid for PointsBet’s North American arm.

Even if another suitor acquires PointsBet, Penn could benefit because the regional casino operator owns an equity stake in the Aussie bookmaker.

Late last year, PointsBet was in talks to sell its Australian business. The company has since terminated those negotiations, but it said it remains in talks with other third parties that expressed interest in acquiring its Aussie unit.

PointsBet Sources of Allure

While PointsBet has to reach profitability in North America and its share of what’s an ultra-competitive regulated sports betting market is scant, there are points of attraction for bidders.

First, the company hold a license in Ontario, Canada and is live in Colorado, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Virginia, and West Virginia.

Additionally, it sports top line growth and had $251.7 million in cash, as of the end of March, according to the regulatory document.

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