Endeavor is an American holding company for talent and media agencies, representing artists in film, television, music, theatre and more, in addition to professional athletes in the NFL and NHL. It is also the parent company of UFC and Miss Universe.
OpenBet will complement Endeavor’s existing presence in the sports betting industry, which it holds through its ownership of sports data specialist IMG Arena.
When announcing the agreement to acquire OpenBet last year, Endeavor said the combination of the business with IMG Arena would create a unique end-to-end solution in sports betting, delivering official data and video streams, content, mobile products and betting technology solutions.
The original structure of that deal would have seen Endeavor pay a total $1.2bn – consisting of $1bn in cash and $200m in stock – to L&W for the subsidiary.
Now, under revised terms, Endeavor will pay $750m in cash and $50m in stock to the supplier for a total purchase price of $800m; 33% lower than originally agreed.
This will give L&W estimated total net after-tax proceeds of around $700m, the business said, meaning it will have generated some $5.6bn of net after-tax proceeds from this sale and the recently completed sale of its lottery business to Brookfield Business Partners.
L&W said the amended purchase agreement provided a strong valuation in current market conditions.
Light & Wonder president and CEO Barry Cottle: “Endeavor is the right partner for OpenBet and the amended agreement increases speed and certainty by creating a simplified path to closing the transaction.”
The amended transaction is expected to close by the end of Q3 2022, subject to the remaining applicable regulatory approvals and closing conditions.
Barry Cottle, president and CEO of L&W, said: “Endeavor is the right partner for OpenBet and the amended agreement increases speed and certainty by creating a simplified path to closing the transaction, while unlocking substantial benefits for OpenBet and Light & Wonder.
“OpenBet demonstrates continued momentum across their key markets and the amended terms of the transaction provide strong value for the business.
“The significant cash consideration from the OpenBet sale will enable us to further de-lever our balance sheet,” he added.
The sale is the final step in L&W’s journey to streamline its organisation, Cottle added, and the resulting enhanced financial flexibility will enable the business to accelerate the return of capital to shareholders through its share repurchase programme, he concluded.
While the businesses did not provide specific detail on the reason for the price reduction, macroeconomic conditions may well have been the driving force behind the discount.
Since the original deal was struck in September, the share price of both L&W (-44%) and Endeavor (-29%) has dropped off dramatically.
It is not the first occasion in recent times that the price of a major acquisition has been squeezed by prevailing economic factors.
888’s purchase of William Hill’s non-US assets from Caesars Entertainment saw its price reduced by £250m in April, reflecting a shift in macroeconomic factors, as well as the looming threat of regulatory action.