The Pointsbet Holdings Ltd (ASX: PBH) share price has returned to trade with a bang this morning.
At the time of writing, the sports betting company's shares are up 4% to $1.70.
Why is the Pointsbet share price racing higher?
Investors have been scrambling to buy the company's shares this morning after it received a new takeover offer for its US operations.
Earlier this month, fellow sports betting company DraftKings (NASDAQ: DKNG) made a US$195 million offer for the Pointsbet USA business, outbidding a US$150 million offer from rival Fanatics Betting and Gaming in May.
The New York Post reported that this bid was driven partly by the desire of DraftKings' CEO, Jason Robins, to "level the score" with Fanatics boss Michael Rubin after the collapse of merger talks in 2021.
Unfortunately, that score may not be level for long, with Fanatics returning with an improved offer for the business this morning, which has been accepted by the Pointsbet board.
According to the release, Fanatics has increased its offer to a headline cash consideration of US$225 million (~A$333 million). This offer continues to incorporate a two-stage completion, with US$175 million to be received at the initial completion and US$50 million to be received at the subsequent completion.
The Pointsbet board unanimously recommends that shareholders vote in favour of the Fanatics offer at the extraordinary general meeting on 30 June.
What does this mean for shareholders?
Given the increased headline cash consideration, the company currently estimates that distribution of capital to shareholders would now be approximately $1.39 to $1.44 per share.
This proposed distribution of capital is expected to be made over two tranches, with each tranche following shortly after each completion payment. The company advised that it will commence the necessary process to facilitate the proposed distribution in the coming months, with the first tranche of approximately $1 per share expected to be paid in mid-September.
Pointsbet's Chairman, Brett Paton, said:
he improved proposal delivers PointsBet shareholders a 50% or US$75 million increase to the acquisition price originally agreed with Fanatics Betting and Gaming. Following the receipt of a non-binding indicative offer for our US Business from DraftKings on 16 June 2023, the PointsBet team entered negotiations with both parties.
The Board unanimously supports the improved proposal from Fanatics Betting and Gaming, which provides a superior price plus certainty. Fanatics Betting and Gaming conducted their diligence process and negotiations in a highly professional manner at all times. The offer to "front end" the additional consideration is an element which we regarded as a welcome and significant benefit to our shareholders.