I have done some detailed reading and work on Pointsbet, the US...

I have done some detailed reading and work on Pointsbet, the US sports betting industry and the various competing bidding parties since the release of the PBH's Friday ASX announcement. The bid from DraftKings strike as a typical starting point of a bidding war, referring to the strategic position that PBH's US business is in. Typically in such an industry where the top three that has cemented its position already will turn their attention for further market share by grabbing the #4, #5, #6, #7 etc players in the industry as the top three compete with themselves to become the dominant. This is the lowest hanging fruit and due to the valuation discrepancies ascribed to the top players vs. bottom feeders, it becomes even more sensible due to this valuation arbitrage.

I have done an analysis on what I think PBH is really worth per share, and put at the bottom three scenarios where further competing bids may come in. Obviously they may never eventuate but two things worth of note is that firstly at the current price of $1.365 PBH has almost no downside risk, at that price you are effectively buying a very low cost call option on the stock. Secondly, you can see the top players in the industry has a tremendously large market caps relative to what we are playing with on Pointsbet. An extra US$50m really doesn't mean a lot to the big players considering the strategic market share win they can achieve. At Fanatics and DraftKing's latest market capitalisations, the entire PBH bid at US$195m represents circa 1% of their total market cap. Raising it by another US$100m or so would still but it at 1-2% of their respective market caps. We haven't heard from Entain/BetMGM or Flutter yet and it doesn't seem they are shy from making acquisitions noting Entain's acquisition of STS at over A$1bn.

Overall I feel PBH is well underwritten at the current $1.365 price and a price north of $1.74 would be fair.

This is getting interesting.