Fanatics has agreed to acquire the U.S. operations of PointsBet, marking the sports giant's first major leap into U.S. sports betting.
The deal is worth about $150 million in cash. The companies announced the deal Sunday night soon after CNBC reported an agreement was reached.
"Fanatics and PointsBet are excited to enter into an agreement for Fanatics Betting and Gaming to acquire PointsBet's U.S. business," the companies said in a joint statement. "While there are still several steps in the process to complete the acquisition, both parties are confident in the outcome. Fanatics Betting and Gaming and PointsBet will provide further details of the proposed deal and timely updates in the coming weeks."
Fanatics will gain access to at least 15 states with the deal, according to people familiar with the deal who declined to be named because discussions were private. Fanatics expects to have access to the majority of states where PointsBet operates by the start of the NFL season, according to one of the people.
PointsBet, whose shares are traded in Australia, is expected to hold a shareholder vote on the deal in late June. Only PointsBet's U.S. assets are part of the deal. Fanatics will plan to fund some of the remaining cash flow burn from PointsBet, which has had to spend heavily on marketing to compete with larger rivals DraftKings and FanDuel.
PointsBet forecast a loss of between $77 million and $82 million for the second half of the year. Citing "very challenging" market conditions, the company said Sunday that it would need to raise additional capital at a "significant discount to recent market prices" in the near term if the deal with Fanatics somehow fell apart.
NBCUniversal will get proceeds from its previous deal with PointsBet and will no longer have an equity stake, according to PointsBet. NBC acquired a 4.9% equity stake in PointsBet in 2020.
Fanatics has been in talks with a number of different sports betting companies over the past year as it has plotted its path forward in mobile gambling.
"This is a 10-year journey," Matt King, the CEO of Fanatics Betting, said at the SBC Conference earlier this month. "We're going to move very methodically through that 10-year journey. And by doing that and taking that approach, it allows you to be a bit more considered in your decisions. You can kind of move slower, slightly slower today, in order to move fast later."
Fanatics is a sports platform company with a private valuation of $31 billion. The company has forecast 2023 revenue of $8 billion.
Fanatics owns commerce assets, a sports trading card business, and is building out a sports betting division. The company acquired legendary trading card company Topps for $500 million last year.
Disclosure: NBCUniversal is the parent company of NBC Sports and CNBC.
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May 15, 2023 at 07:30AM
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Fanatics to buy PointsBet's U.S. assets for about $150 million - CNBC
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