Rumour has it that Pointsbet Holdings Ltd (ASX: PBH) shares were in the sights of a potential takeover two weeks ago. Yet, here were are, with no word of a deal being considered by the board.
At the time of writing, shares in the sports betting company are holding up well during a difficult day for the market. Currently, the S&P/ASX 200 Index (ASX: XJO) is down a significant 2.26%. Meanwhile, Pointsbet shares are 1.96% in the green.
Perhaps the market is only now responding to the prospects of Pointsbet being a takeover target. But rather than speculate, let's take a look at what has been reported.
Betting on itself
The Pointsbet share price has seen better days, that's for sure. Unfortunately for shareholders, a growing concern about rising interest rates has pulled valuations of many unprofitable names back down to Earth.
Pointsbet shares have not been immune to the drawdown. Reporting a $247.9 million loss for the 12 months ending 31 December 2021, investors have lost their confidence in the company under the current economic conditions.
However, the 87% retracement in the company's shares has now put it on the takeover menu. Unbelievably, Pointsbet could almost be considered a Warren Buffett-style investment based on its price-to-book value.
At the end of last year, the company counted $569 million worth of cash and equivalents on its balance sheet. Comparatively, Pointsbet's current market capitalisation is approximately $535 million.
Now, realistically, the business has likely chewed through a chunk of that capital in the first six months of this year unless it has drastically clamped down on expenses. Though, reports of an approach from Rupert Murdoch's News Corporation (ASX: NWS) indicate there still might be value in Pointsbet shares.
According to reports, a consortium including former Sportsbet chair Matthew Tripp lobbed a deal worth over $200 million at Pointsbet for its Australian division. It is believed the deal was an attempt to give News Corp scale for its own offering in the works.
Reportedly, the Pointsbet board rejected the offer without presenting it to shareholders. This is at a time when the company expects the Australian division to soon be EBITDA positive.
Are Pointsbet shares an opportunity?
While the Pointsbet share price is down 71% since the start of the year, some brokers are still bullish on the company.
As my Fool colleague James covered recently, Bell Potter is one such broker with a buy on Pointsbet shares. The large market opportunity in the United States fed into the analysts placing a $6 price target on the company.
For context, shares are currently swapping hands at $2.08, indicating a potential 188% upside.
