Apollo Global Management, the private equity firm that acquired Yahoo from Verizon (NYSE:VZ) for $5 billion last year, is having preliminary discussions with sports-betting companies to merge their assets with Yahoo Sports, according to people familiar with the matter.
One of the companies Yahoo has spoken with is Australia-based PointsBet Holdings, which has a market valuation of about $760 million, said the people, who asked not to be named because the discussions are private.
All talks at this stage are early, and no deal is imminent, said the people. Yahoo hasn’t settled on a target and may not pursue a deal, the people said. Spokespeople for Apollo and PointsBet declined to comment.
Apollo and Yahoo are considering merging Yahoo Sports with an existing sports-betting company, a move that could set up an eventual spinoff of Yahoo Sports, two of the people said. If a deal is struck, the new company would likely keep the Yahoo branding, the people said.
Yahoo was an early provider of fantasy sports tools and has millions of players who would likely be crossover candidates for legalized sports betting. Legalized mobile sports gaming is slowly spreading across the country and is currently operational in 19 states.
The sports-betting industry has slumped in recent months as a swath of companies have made customer acquisition increasingly expensive through significant marketing costs and promotional offers. Last month, DraftKings projected its 2022 earnings before interest, taxes, depreciation and amortization to be a loss of $825 million to $925 million — wider than consensus estimates of about $570 million. Short seller Jim Chanos told CNBC in December he has taken a short position in DraftKings because of its “insane” spending on marketing.
VZ shares gained 66 cents to 1.2% to $54.27.
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