The Pointsbet Holdings Ltd (ASX: PBH) share price is on watch this morning after revealing an acquisition called Banach Technology.
Why will the Pointsbet share price be on watch?
Pointsbet’s Irish subsidiary called Lockspell has entered into a binding agreement to acquire Banach Technology Limited.
The acquisition will cost US$43 million on a cash and debt free basis. It will be paid with 55% in cash and the rest in shares – 1,752,875 of them to be precise.
Banach is a Dublin-based provider of risk management platforms and quantitative driven trading models that support pre-game and in-play betting products across numerous sports, including the four major American sports and international soccer.
Pointsbet will provide Banach with US$4 million in funding to assist in the conversion process of existing equity options.
The ASX betting business said that the Banach team is deeply experienced, particularly in leading pre-game and in-play sports wagering markets, having previously established the quantitative division of Paddy Power (now called Flutter Entertainment).
What will this mean for Pointsbet?
Pointsbet said that this acquisition will position Pointsbet as a leader of in-pay sports wagering in the US, just as in-play wagering is expected to grow exponentially.
The company said that within the next three years, in-play wagering is expected to be around 75% of all sports wagering in the US.
Pointsbet also said that through “highly sophisticated” risk management algorithms and deep trading experience, Banach’s technology will allow Pointsbet to optimise achieved margin and offer superior value to customers.
Banach currently provides services to several of the world’s premium sports book operators. Pointsbet will honour these contracts, with the revenue generated to cover the costs of the Banach business.
Management comments
Pointsbet CEO and Managing Director Sam Swanell said: “In Banach we have found a like-minded team of technologists and the acquisition is a preferable approach to developing our in-play capabilities organically, given it allows us to dramatically ramp up our speed to market while still allowing us to own market leading technology and continue to control our destiny.”
Time to jump on the Pointsbet share price?
This seems like a solid acquisition by Pointsbet which could help growth. The US market is a huge potential opportunity – if Pointsbet gets it right then it could become a much bigger business. If management thought this was necessary, then it’s a good move.
Pointsbet could be one to watch if its market share keeps growing.
