The vote took place at an extraordinary general meeting today (30 June). Some 99.16% of voters approved the sale and 0.84% voted against.
PointsBet’s board had already unanimously approved the sale agreement and recommended shareholders also vote in favour of the proposition.
Shareholder approval will allow the sale process to move to the next stage. However, neither PointsBet nor FBG have set a completion date for the deal.
Superior proposal
A division of sports retail giant Fanatics, FBG tabled an improved proposal worth $225.0m (£178.2m/€207.0m) earlier this week.
FBG had already reached an agreement with PointsBet to acquire its US business In May for $150.0m
However, earlier this month, DraftKings had submitted a higher proposal worth $195.0m. PointsBet said it would engage with DraftKings over what it said could be a “superior” proposal.
Upon confirmation of the improved FBG offer, DraftKings announced that it would no longer pursue a deal to acquire PointsBet US.
FBG “thrilled” with vote outcome
Responding to new of the vote, FBG said it was “thrilled” shareholders had opted to back the proposal.
In a statement issued to iGB, an FBG spokesperson described it as a “pivotal” moment for the business.
“We moved decisively to close the deal and we look forward to working with our friends at PointsBet to finalise the remaining acquisition details,” the spokesperson said. “This is a pivotal moment for FBG that will accelerate our growth in the legal online sports betting, advance deposit wagering and igaming markets in the US.
“Pending regulatory approvals in the various states in which PointsBet operates, we will have more details to share in the coming weeks on how the acquisition of PointsBet US businesses will bring to life our unique vision for FBG.”
Addressing uncertainty
Ahead of today’s vote, PointsBet chairman Brett Paton addressed shareholders about why the decision to sell the US business.
Paton said that while PointsBet had experienced strategic success in the US, the costs of competing against major brands meant the business would not be cash flow positive in the near term.
“Continuing to operate the US business would require significant capital and further capital raises,” Paton said. “This transaction addresses that uncertainty.
Having said that, many of the largest established brands with substantial databases have also struggled. One has spent around US$2.5bn on their online aspirations after starting with a strong brand and database and have only achieved mid-single digit market share. Other big spending online operators have gained less traction. Many have closed.
“In the US, PointsBet has generally flexed all of our competitive strengths as a challenger business. In particular, we have used our technology to deliver a leading sports betting product experience. But our ability to get to scale and operate at sustainable scale was challenged.
“We have been competing in a very high-cost operating market with the overlay of capital pressures to continue funding the business through to profitability.”
Retained businesses
Paton noted PointsBet would continue to have a presence in North America. The proposed sale agreement means PointsBet would retain both its Canadian and Australian businesses.
In addition, PointsBet will retain ownership of its proprietary sports wagering and igaming platform. This is currently used in both the Australian and North American markets.
“We will be granted a perpetual, royalty-free licence to use and further develop the Banach technology assets- including the underlying source code driving OddsFactory,” Paton said.
“This will give us options in the future to exploit PointsBet’s proprietary sports wagering and igaming platform in other regions outside of the US and in the US beginning 18 months after completion of the proposed sale.
“To summarise, the board believes that the proposed sale of the US business delivers the most attractive risk-adjusted value outcome for shareholders, compared to the risks and benefits of PointsBet pursuing other potential options including the status quo.”