Why PointsBet Urges Shareholders to Reject betr’s Scrip Takeover Offer

• PointsBet Board unanimously recommends rejecting betr’s all-scrip offer
• betr proposes 4.219 shares for each PointsBet share, but offer deemed inferior
• PointsBet favors MIXI Australia’s unconditional $1.25 cash takeover bid
• Concerns raised over betr’s valuation, liquidity, and uncertain selective buy-back
• Potential adverse tax consequences and conditional offer risks highlighted

Background to the Takeover Battle

PointsBet Holdings Limited (ASX – PBH) has formally responded to the unsolicited takeover bid from betr Entertainment Limited (ASX – BBT) by lodging its Target’s Statement with ASIC. The all-scrip offer from betr proposes to exchange each PointsBet share for 4.219 betr shares. However, the PointsBet Board has unanimously recommended shareholders reject this offer, favoring instead the competing unconditional all-cash takeover bid from MIXI Australia at $1.25 per share.

Why PointsBet Recommends Rejection

The PointsBet Board’s opposition to betr’s offer is grounded in several key concerns. Firstly, accepting the scrip offer would expose shareholders to the risks of the betr business, which PointsBet describes as having a volatile, VIP-heavy customer base and a product mix heavily skewed towards racing, a sector in secular decline. PointsBet argues its own mass-market customer base is more valuable and stable.

Secondly, PointsBet disputes betr’s valuation methodology, noting that betr’s share price has generally traded below the $0.32 price used to value the offer. The Board also highlights unusual trading patterns in betr shares, suggesting possible price manipulation to support the offer’s perceived value.

Thirdly, the offer’s value is heavily dependent on synergies that PointsBet considers materially overstated and unlikely to be realised, especially given MIXI Australia’s substantial 36.72% stake in PointsBet, which limits betr’s ability to acquire 100% ownership and thus fully capture synergies.

Uncertainty Around betr’s Selective Buy-Back

betr has proposed a selective buy-back of some shares issued under the offer, but PointsBet warns this is a complex and uncertain transaction. betr’s available cash and debt position cast doubt on its ability to fund the buy-back, and the timing and approval process remain unclear. The buy-back price is set at $0.32 per betr share, slightly above the current market price, which could be value-destructive and pressure betr’s share price downward.

Liquidity and Tax Implications

PointsBet also flags the low liquidity of betr shares on the ASX, which may prevent shareholders from selling their new holdings at or near market prices. This contrasts with the cash certainty offered by MIXI’s bid. Furthermore, the all-scrip nature of betr’s offer means scrip-for-scrip capital gains tax rollover relief is unlikely to be available, potentially exposing shareholders to adverse tax consequences.

Board Alignment and Next Steps

All PointsBet Directors have accepted the MIXI Takeover Offer for their own shares, underscoring their confidence in the cash bid. The Target’s Statement advises shareholders to take no action to reject betr’s offer. The offer period is scheduled to close on 22 September 2025, but may be extended. PointsBet shareholders are encouraged to consider the risks and consult professional advisers before deciding.

Bottom Line?

As the battle for PointsBet intensifies, shareholders face a critical choice between a risky scrip offer and a cash-backed bid with board endorsement.

Questions in the middle?

• Will betr improve its offer or provide greater certainty around the selective buy-back?
• How will MIXI Australia respond if betr gains significant shareholder support?
• What impact will this takeover tussle have on PointsBet’s operational strategy and market position?