BlueBet PLC has stepped up its bid to acquire PointsBet Holdings, submitting a counter-offer despite the latter already agreeing to a deal with MIXI Australia.
The BlueBet board entered a scheme arrangement and secured funding to offer AU$1.28 per share to buy PointsBet outright. MIXI Australia offered only AU$1.06 per share.
BlueBet’s proposal puts PointsBet’s valuation at AU$360 million and investors can be flexible with how they receive their rewards.
MIXI offered all cash, but BlueBet put forward more than an all-cash option with an all-scrip alternative in place or a combination of both. This difference gives BlueBet a crucial advantage.
The AU$1.28 per share valuation by BlueBet is also a 21% premium on the MIXI deal, making it a more tempting deal for PointsBet shareholders.
Why Does BlueBet Want PointsBet?
BlueBet wants to buy PointsBet is to strengthen its presence in Australia. They believe an acquisition will help them reach their goal of realising AU$4 billion in annual turnover, taking a 10 percent share of the Australian online betting market for the company.
They made earlier attempts to buy PointsBet, but negotiations were unsuccessful. PointsBet were reportedly unhappy with the uncertainties around the financial terms. PointsBet decided to take the AU$350m all-cash deal from MIXI Inc.
BlueBet refused to give up their pursuit. They clarified the sticking point and raised AU$160m in equity. They also secured a new AU$100m debt-funded agreement to support their bid.
The company is projecting another AU$40m in cost synergies if the deal goes through. The plan is to put all operations under one brand. They want to finish the customer migration process three months after the acquisition is ratified.
Expanding Market Share Through Mergers and Acquisitions
BlueBet is aggressively expanding its horizons. They are in talks to buy Northern Territory-based bookmaker and racebook TopSport for AU$15m.
Reputable sportsbook comparison website BettingTop10 rates TopSport as one of the top bet apps in Australia and an acquisition would be a massive coup for BlueBet.
The deal is being funded by an equity raise as BlueBet continues to push its long-term goal of capturing up to 15% of the Australian sports betting market.
BlueBet will compensate the owners of TopSport with AU$10m in cash and 30% of the payment in new BlueBet shares, valued at approximately AU$3m.
TopSport investors will receive another AU$5m over three years based on incentives to bring the total guaranteed sum to AU$15m.
BlueBet believes this is a crucial move to achieve its vision. TopSport specialises in niche sports, complementing BlueBet’s operations in a way that does not create an overlap in customer bases.
Leadership and Market Position
Former William Hill Australia chief executive officer Michael Sullivan founded BlueBet in 2015. The company is a disruptor in the betting market, one that challenges other companies.
A merger with Betr last year made them even stronger, and they are looking to maintain an even stronger grip on the Australian betting scene.
BlueBet CEO Andrew Menz said the structure of the deal provides flexibility to all PointsBet shareholders to mix and match between their preferred combination of cash and scrip.
Those opting to take scrip will gain exposure to significant potential upside, driven by an expected AU$40m cost synergy prize and further organic and inorganic growth as BlueBet consolidates the Australian wagering market.
The deal will result in a few adjustments in the front office. TopSport CEO Tristan Merlehan, will join BlueBet as chief trading officer. His father, Lloyd Merlehan, takes a new position as a corporate advisor.
Topsport’s bosses have assured any concerned customers that they will continue to receive a pristine level of service and will benefit from the link-up with BlueBet.
