Under the terms of the agreement, Sportradar will pay an initial $20m to XLMedia on completion of the deal. XLMedia will be due up to an additional $10m dependent on future performance.
Should XLMedia shareholders approve the deal at a meeting on 7 November, the sale will complete soon after. Sportradar has secured irrevocable undertakings from parties representing approximately 31.2% of XLMedia shares ahead of this.
Earlier this year, XLMedia also sold its Europe and Canada sports betting and gaming assets to Gambling.com Group. Together with the North American deal, the sales could generate up to $72.5m for XLMedia.
Why is XLMedia selling up?
Detailing the latest sale, XLMedia said when it agreed to offload its other businesses, this left the North America segment as its sole material asset
While the board was confident of long-term potential in the US – as detailed in its 2023 results – it believes XLMedia’s current scale on a standalone basis “could impact its ability to compete in the evolving US market”.
The board also said after the European business’ sale, the North America business “may be considered too small to remain listed”. In line with the sale agreement, XLMedia will register as an ‘AIM Rule 15 Cash Shell’ without trading operations. Ths is an an AIM company that has divested itself of all of its trading business
“The board, management and staff have worked hard to successfully integrate the three acquired entities to create the North America business, including the development of the media partners business and the strong relationships with major US operators,” XLMedia said. “However, the growth of its US revenue streams did not match the group’s original plans.”
An obligation to fund historical US acquisitions has limited the group’s ability to participate in further acquisitions. Instead, it has focused on growing its existing owned and operated footprint and expanding its media partnership business roster.
Offer represents fair value for XLMedia
Total consideration for the sale represents an implied value of up to 8.8p per ordinary share and a multiple of 5.5x adjusted EBITDA 2023 for the segment. XLMedia said the offer represents a “fair net present value” for the standalone North America segment’s future revenue and profitability.
Revenue and estimated adjusted EBITDA attributable to the North America business in 2023 was $27.5m and $5.5m, respectively.
“In an ongoing commitment to maximise shareholder value, following the Europe disposal, the board is pleased to have reached an agreement to sell the North America business to Sportradar pending shareholder approval,” XLMedia chairman Marcus Rich said.
“We anticipate an initial distribution from the net proceeds to shareholders before year end.”
Original article: https://igamingbusiness.com/strategy/ma/xlmedia-offloads-north-america-business-sportradar/
