PointsBet rejects latest Betr takeover bid, citing VIP risk and valuation volatility

PointsBet has unanimously rejected the latest takeover bid from Betr, flagging concerns over business quality, integration risks, and valuation volatility, while reaffirming its support for a competing all-cash bid from Japan’s MIXI Inc.

PointsBet’s board described Betr’s all-share offer as “materially less” attractive than MIXI’s revised proposal, which is currently open to shareholders.

Betr’s offer, submitted on July 16, proposed 3.81 of its own shares for each PointsBet share, a deal it said was worth AU$1.22 ($0.80) per share based on a $0.32 Betr share price. With projected annual cost synergies of AU$44.9 million, Betr argued the transaction could reach a total implied value of AU$1.89 ($1.24) per share.

However, PointsBet dismissed the offer, citing exposure to “unattractive” aspects of Betr’s operations, including a “volatile” VIP-heavy customer base, a “sub-scale” sports betting business concentrated in horse racing, and persistently high customer churn despite promotional spending.

The company also said the potential benefits of synergies were “materially overstated” and would only be realizable if Betr acquired 100% of PointsBet, adding that there were “significant integration and implementation challenges” that would diminish any value gains.

PointsBet further criticized the proposal’s structure, noting that the all-share deal exposed its shareholders to fluctuating value, unlike MIXI’s cash bid. It also flagged uncertainty around a proposed buyback mentioned in the offer, which would not be subject to shareholder approval.

Meanwhile, MIXI’s improved offer - AU$1.20 per share in cash, valuing PointsBet at an enterprise value of AU$402 million - is now officially open. It requires 50.1% shareholder acceptance and has already secured 17.18% via pre-bid agreements and director-held shares. MIXI has also cleared regulatory hurdles in Ontario and the Northern Territory.

PointsBet shareholders had previously approved the MIXI offer with 95.69% of votes cast at a June 25 meeting. However, the scheme failed due to a dispute over proxy votes. Betr, which holds 19.9% voting power in PointsBet, alleged its votes were “impermissibly excluded” from the tally. A system error was later confirmed, and a recount showed only 70.48% support, short of the required threshold.

Betr has not publicly responded to PointsBet’s latest rejection.