XLMedia has agreed to sell its European and Canadian assets to Gambling.com Group (GAMB) for a total consideration of $42.5m (£33.3m/€38.9m).
The deal will involve a fixed sum of $37.5m plus a potential earnout of up to $5m. The newly acquired assets by GAMB brought in $21.4m in revenue and $6.6m in adjusted EBITDA for XLMedia in 2023.
XLMedia also confirmed that as of 31 December 2023, both sets of assets had an unaudited balance sheet valuation of around $15.4m, with GAMB paying nearly three times that to acquire.
Assets in the deal include Freebets.com, WhichBingo.co.uk, Nettikasinot.com and Vedonlyonti.com, together with smaller Europe and Canada sites. The sale does not however involve any of XLMedia’s North American assets, which represent around 55% of expected group revenue in the 2023 financial year.
Full company sale considered
XLMedia also confirmed that its board has been in discussions regarding the sale of the whole company, but that while there was demand to acquire its assets, a full sale was “unlikely to create the most value for shareholders”. This is pinned down to the prevailing share price of the company at the time of the discussions.
The company expects there to be transition costs for technology migration for six months upon the deal’s close and will also retain cash, debtors and liabilities from the assets.
The affiliate will use the raised funds to cover asset transition costs, pay a final deferred US acquisition payment of $4m, settle outstanding tax provisions and provide capital to support the North American business.
XLMedia also intends to use the capital to “focus on delivering value for shareholders from its North America business”.
“Excellent outcome”
Marcus Rich, chair of XLMedia, said on the deal that the company’s board “believes the sale of these assets, which is approximately two times the current market capitalisation of the whole company, is an excellent outcome for XLMedia and its shareholders.
“Importantly, this transaction will allow the company to clear legacy liabilities, provide working capital and return cash to shareholders,” Rich added.
GAMB will pay XLMedia the fixed $37.5m in three instalments, with the first coming on 1 April 2024 in $20m, followed by another $10m on the six-month anniversary of closing and the final $7.5m together with any earnout consideration on the first anniversary of the deal’s completion.
North American strategy
XLMedia’s strategy for North America remains “to expand the sports footprint, deepening audience relationships and diversifying revenue streams with the goal of a more predictable, stable income”.
It also hopes to drive organic revenue growth while improving margins and generating revenues. There are no current plans for acquisitions in North America.