Tabcorp Could Eye Bid for PointsBet Aussie Operations

PointsBet (OTC: PBTHF) has long viewed as a potential takeover target — sentiment pertaining to both its Australia and US operations. Speculation is intensifying regarding the former.

PointsBet
PointsBet advertised at an Australian Rules Football game. The company could be a takeover target in Australia and the US. (Image: CNBC)

Citing unidentified sources, the Australian Financial Review reports that Tabcorp held initial talks with PointsBet regarding a takeover of the latter’s Aussie sports wagering business. If that’s accurate, Tabcorp would be at least the third company to potentially move on PointsBet’s operations in its home country with the other two being Betr parent NTD Pty Limited and Entain Plc (OTC: GMVHY).

A PointsBet spokesman interviewed by the Australian Financial Review didn’t comment specifically on discussions with Tabcorp, but did confirm there is “there is a lot of third-party interest in our company.” PointsBet CEO Sam Swanell made similar remarks on the operator’s fourth-quarter financial update conference call.

The amount of third-party strategic interest shown in our company demonstrates we have built a very valuable business,” he said during the company’s fourth-quarter financial update. “This gives us significant optionality around how we take the business forward to maximize value for our shareholders.”

Rumors pertaining to the potential sale of PointsBet date back at least a year and are widely believed to have been initiated by chatter that News Corp.-backed Betr was looking to bid for its rival.

What It Could Mean for PointsBet US Ops

While rumors regarding the fate of PointsBet’s Australia business are long-running, the same is true regarding the operator’s US unit.

Should a takeover of the company’s Australia outfit materialize, that could increase the likelihood of a similar move for the firm’s US arm. Some potential domestic buyers might not be interested in buying PointsBet outright because they don’t have international operations and don’t want to contend with Australian regulations.

Additionally, if PointsBet’s Australian unit is sold prior to a similar move occurring in the US, the price a suitor in the US would pay for just the North American business would be more digestible than the cost of buying the entire company. PointsBet’s market capitalization of $271.54 million is affordable for any number of prospective suitors, but that figure pertains to the entire company, meaning that if it’s broken up in the acquisition process, it likely becomes all the more affordable.

For US buyers, the allure of PointsBet likely boils down to the an attractive price tag, the operator’s licenses and the belief it can effectively add market share – something the Australian bookmaker has struggled to do in this country.

What’s Next for PointsBet in Australia

It’s not yet clear with which parties PointsBet is holding takeover talks with in Australia or how advanced those discussions are. That makes forecasting next moves difficult.

Still, the aforementioned suitors are credible. For example, Entain has been on a buying binge of late and executives from the Ladbrokes operator recently commented that acquisitions will remain essential to its expansion strategy.

That while rumors fly that Entain itself could be a takeover target at some point this year.

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