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Gambling.com Group has agreed to acquire XLMedia’s European and Canadian sports betting and gaming assets.

The deal, valued at up to $42.5m, includes a fixed sum of $37.5m, with an additional potential earn-out of up to $5m. 

The assets involved in the transaction include affiliate brands such as Freebets.com, WhichBingo.co.uk, Nettikasinot.com, and Vedonlyonti.com, alongside smaller European and Canadian sites. 

XLMedia’s North American owned and operated business, which contributed approximately 55% of the group’s revenue in 2023, is not part of the acquisition.

The transaction is slated for closure at the beginning of April, pending customary closing conditions. 

Deal details

Following the acquisition, Gambling.com Group anticipates generating around $10m in revenue and approximately $5m in incremental adjusted EBITDA from April to December 2024.

The fixed consideration of $37.5m is paid in three instalments: an initial payment of $20m upon closing, an additional $10m six months later, and a further $7.5m, together with the potential earn-out, on the first anniversary of the closing, contingent upon the assets’ revenue performance for the remainder of 2024.

In FY23, the assets are estimated to have generated unaudited revenue of $21.4m and adjusted EBITDA of $6.6m.

This transaction therefore reflects a multiple of 6.4 x the estimated FY23 proforma adjusted EBITDA attributable to the assets.

Gambling.com Group plans

Gambling.com Group expects to fund the purchase price from existing cash on hand, borrowings under the new credit facility, and future cash flow.

“This acquisition will provide us with another big brand and assets that complement our existing website portfolio in a number of our key-focus markets, enabling us to drive further growth which is both high margin and highly accretive,” said Gambling.com Group CEO Charles Gillespie. 

“By operating these assets on our technology platform, we expect to unlock their full potential. We are confident that this latest acquisition will create incremental shareholder value in the same way we have done with previous acquisitions.”

XLMedia strategy

XLMedia plans to utilise the proceeds from the transaction to cover asset transition costs, settle outstanding tax provisions, and provide working capital for its North America business, while also returning cash to shareholders.

“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,” said XLMedia chair Marcus Rich.

“Importantly, this transaction will allow the company to clear legacy liabilities, provide working capital and return cash to shareholders,” he added.

Since 2020, XLMedia has been strategically shifting its focus towards sports and gaming in regulated markets, particularly in North America.

In July, XLMedia sold off three of its European gaming domains and their associated websites for a total upfront cash consideration of $4m.

The group said it had also been in discussions with potential buyers for the whole company, “but it was clear while there was demand for the assets, given the prevailing share price, a sale of the whole company was unlikely to create the most value for shareholders.”

In December 2023, XLMedia said it was exploring the opportunity to create shareholder value through further asset sales

XLMedia said it was engaged in “early discussions” with potential buyers, albeit no sale was completed at the time.

Upcoming reorganisation

Once the deal is completed, XLMedia plans to reorganise to support the North America business.

The company’s strategy for North America remains focused on expanding its presence in sports, building stronger audience connections, and diversifying revenue streams for more stable income.

Additionally, XLMedia aims to grow its gaming offerings in select markets through quality content and engaging consumer features “to capitalise on the high-margin vertical.”

The near-term focus will be to continue to drive organic revenue growth while improving margins and generating revenues. 

There are currently no plans for XLMedia to acquire businesses in North America.

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