XLMedia to sell Europe & Canada assets to Gambling.com Group

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XLMedia has entered into a binding agreement with Gambling.com Group for the sale of its Europe and Canada sports betting and gaming assets.

The digital media company reported last December that it was exploring the potential sale of its assets to generate shareholder value, but at the time, its board stated that there is “no certainty that any sales will be completed”. That has since changed. 

The binding agreement for the sale of its Europe and Canada sports betting and gaming assets to Gambling.com has a total consideration of up to $42.5m, including a fixed sum of $37.5m plus a potential earnout of up to $5m based on revenue performance.

The assets that are part of the deal include Freebets.com, WhichBingo.co.uk, Nettikasinot.com and Vedonlyonti.com, together with smaller Europe and Canada sites.

The fixed sum of $37.5m will be paid in cash across three instalments – $20m being payable on the completion anticipated to be April 1; $10m on the six-month anniversary of closing; and $7.5m together with any earnout consideration on the first anniversary of completion.

Commenting on the transaction, Marcus Rich, Chair of XLMedia, said: “The 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.”

For the year ended December 31, 2023, the revenue and adjusted EBITDA attributable to the assets are estimated to be $21.4m and $6.6m respectively.

Based on this expected adjusted EBITDA and revenue, the $42.5m total consideration represents approximately: 3.5 times the total expected adjusted EBITDA of around $12m for the group; and a multiple of 6.4 times the estimated adjusted EBITDA of $6.6m for the assets.

As of March 20, 2024, the total consideration represents approximately 200 per cent of the group’s market capitalisation. Once the transaction is completed, XLMedia will incur transition costs principally for the migration of technology for six months and will retain cash, debtors and liabilities.

Proceeds from the transaction will be used to cover the asset transition costs, pay the final deferred US acquisition payment, as well as settle outstanding tax provisions and provide working capital to support the North American business while returning cash to shareholders.

XLMedia noted that the deal will help it “focus on delivering value for shareholders from its North America business”, as it is “well positioned” to drive revenues across its Owned and Operated and Media Partnership Business segments in existing regulated states and new states when they legalise online sports betting.