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For nearly five months, Japanese tech firm MIXI and sports betting operator Betr have been engaged in a heated battle to acquire the Australia-based online bookmaker and casino operator PointsBet.
Now the drama has escalated even further as MIXI Australia has disclosed that it holds 9.15% voting power in PointsBet, following pre-bid acceptance agreements with major shareholders, and has made its second official offer to acquire the Australia-based operator.
The attention now turns to PointsBet shareholders who face a pivotal decision of choosing between two vastly different visions for the company.
MIXI vs. Betr: A Timeline of the Takeover Battle
In late February, MIXI made an offer of A$1.02 per share, valuing PointsBet at A$353 million. The offer was countered by PointsBet rival BlueBet, which subsequently merged with Betr.
The offers were significantly different. MIXI made an all-cash offer, while Betr’s was an all-stock offer. PointsBet board favored MIXI’s cash offer over Betr’s stock offer.
In response to Betr’s competition, MIXI raised its offer to A$1.20 per share last month, valuing the company at over A$400 million.
Shortly after, Betr also improved its bid, offering 3.81 shares for each PointsBet share. The transaction valued PointsBet at A$1.22 per share based on Betr’s stock price of A$0.32.
To offset concerns about its stock volatility, Betr proposed a selective buy-back of shares issued to PointsBet shareholders at A$1.22 per share.
However, the buyback was capped at A$80 million, with the potential to increase to A$200 million if over 90% of shareholders participated.
Betr also claimed that a 100% acquisition would lead to annual cost savings of A$44.9 million, figures independently validated by a Big Four accounting firm.
Moreover, Betr argued that its offer is better than MIXI’s, which included a 50.1% acceptance condition.
A shareholder vote was held in June, which showed overwhelming support for MIXI’s offer. However, it turned out that a “system error” erroneously excluded Betr’s 19.6% voting rights from the counting.
Both Betr and MIXI Raise the Stakes
On July 16, Betr made its second official bid for PointsBet, emphasizing the potential value it would add post-merger. In its proposal, the company stated:
“This is just the start of the value creation journey we envisage for Betr and PointsBet Shareholders for the Combined Business. Significantly, in addition to this, PointsBet Shareholders can benefit from the additional longer term value upside and potential re-rating from the Betr management team’s unparalleled track record of success.”
A day later, on July 17, MIXI responded with a revised bid of its own, reiterating its position that a cash offer provides greater certainty. In its statement, MIXI said:
“The Offer delivers certainty of value in the form of cash consideration for all PointsBet Shareholders. Furthermore, if you accept the Offer and it becomes unconditional, you will no longer be exposed to ongoing risks and uncertainties regarding your investment in PointsBet.”
As with the previous round, PointsBet’s board opted for the MIXI offer, citing the security of an all-cash deal, as well as its superiority based on Betr’s current stock price.
While Betr’s second bid is higher on paper and despite the over 11% rise today in response to the second offer, Betr stock still trades below the A$0.32 level (albeit very close) that the company assumed in its calculation.
Cash Today or the Long Game: Which Offer Is Better for Investors?
Both MIXI and Betr are offering a premium over standard gaming industry valuations. However, they differ significantly in risk and structure.
MIXI’s offer provides more immediate certainty, as it is in cash and not contingent upon stock price fluctuations. It’s a straightforward exit for shareholders with a guaranteed value.
However, if the PointsBet-Betr merger achieves the scale and partnership potential Betr envisions, over the long term, that offer may add more value for PointsBet shareholders.
That said, these mergers often prove more difficult to realize than companies anticipate before the transaction.
Ultimately, while the board has recommended that shareholders ignore Betr’s offer and accept MIXI’s proposal, PointsBet shareholders hold the key to the company’s future, choosing between the certainty of cash today or a bet on longer-term upside.
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