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XLM Xlmedia Plc

11.25
0.00 (0.00%)
24 May 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Xlmedia Plc LSE:XLM London Ordinary Share JE00BH6XDL31 ORD USD0.000001
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 11.25 11.00 11.50 11.25 11.25 11.25 8,990,020 07:40:37
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Advertising, Nec 73.74M -9.44M -0.0359 -3.13 29.54M

XLMedia PLC Divestment of Europe and Canada assets

21/03/2024 10:50am

RNS Regulatory News


RNS Number : 8011H
XLMedia PLC
21 March 2024
 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit) Regulations 2019. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

 

21 March 2024

 

XLMedia plc

("XLMedia" or the "Group" or the "Company")

 

Divestment of Europe and Canada assets

 

Binding agreement to sell Europe and Canada assets for a total consideration up to $42.5 million

 

 

XLMedia (AIM: XLM), a leading global digital media company that manages a portfolio of premium brands with an emphasis on Sports and Gaming in regulated markets, announces that it has entered into a binding agreement for the sale of its Europe and Canada sports betting and gaming assets (the "Assets") to Gambling.com Group Limited ("GAMB", the "Purchaser") for a total consideration of up to $42.5 million including a fixed sum of $37.5 million plus a potential earnout of up to $5.0 million (the "Transaction").

 

Key Highlights

 

Following the announcement on 15 December 2023 that the Company had been exploring the opportunity to create shareholder value through further asset sales, the Company has now agreed a sale of its Europe and Canada assets with GAMB.

 

Total consideration for the Transaction is up to $42.5 million, with fixed consideration of $37.5 million ("Fixed Consideration"). In addition, the Transaction provides earnout consideration of up to a further $5.0 million based on revenue performance ("Earnout Consideration").

 

The Revenue and Adjusted EBITDA1 attributable to the Assets for the year ended 31 December 2023 is estimated to be $21.4 million and $6.6 million respectively.

 

Based on the expected Adjusted EBITDA and Revenue for the year ended 31 December 2023 ("FY23"), as announced on 8 February 2024, the total consideration of $42.5 million represents approximately:

 

·    3.5 times total expected Adjusted EBITDA of c$12.0 million for the Group; and

 

·    A multiple of 6.4 times estimated Adjusted EBITDA of $6.6 million for the Assets.

 

In addition, the total consideration represents approximately 200% of the Group's market capitalisation as at 20 March 2024.

 

Following the completion of the Transaction, the Group will incur transition costs principally for the migration of technology, for a period of six months.  The Group will retain cash, debtors and liabilities at the point of completion.

 

The Group intends to use the proceeds of the Transaction to cover asset transition costs, pay the final deferred US acquisition payment and settle outstanding tax provisions and provide working capital to support the North America business while returning cash to shareholders.

 

The Transaction will allow the Group to focus on delivering value for shareholders from its North America business which remains well positioned to drive revenues across its North America Owned and Operated ("O&O") and Media Partnership Business ("MPB") businesses in existing US regulated states and new states when they legalise online sports betting.

 

 1 Adjusted EBITDA is defined as the operating profit after adding back depreciation, amortization, impairment, share based payments, exceptional minimum guarantee cost, restructuring costs and aborted deal related costs.

 

 

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."

 

 

1.    INTRODUCTION

 

The Assets that are the subject of the Transaction include the following: Freebets.com, WhichBingo.co.uk, Nettikasinot.com and Vedonlyonti.com, together with smaller Europe and Canada sites. The Assets do not include XLMedia's North America Owned and Operated and Media Partnership Business, which represented approximately 55% of the expected Group revenues in FY23.

 

The Fixed Consideration of $37.5 million is payable in cash in three installments as follows:

·    the first installment of $20.0 million being payable on the completion anticipated to be on 1 April 2024;

·    the second installment of $10.0 million on the six-month anniversary of closing; and

·    the final installment of $7.5 million together with any Earnout Consideration (up to a maximum of $5.0 million) on the one-year anniversary of completion.

 

The Transaction is completed on a cash-free, debt-free basis and implies a multiple of 6.4 times estimated FY23 proforma Adjusted EBITDA attributable to the Assets.

 

 

2. BACKGROUND TO AND RATIONALE FOR THE DIVESTMENT

 

Since implementing its revised strategic direction in recent years, XLMedia has focused the Group on Sports and Gaming in regulated markets, continuing to pursue a strategy of building a North America business while rebuilding the Europe Sports and Gaming businesses and disposing of non-core assets.

 

·    XLMedia launched its North America Sports market presence with its first US acquisition in 2020 followed by two further acquisitions in 2021.  

·    2022 saw the Group continue its journey to evolve from a Europe Gaming-led business to a North American Sports-led business. North America Sports represented 65% of revenue in 2022.

·    2023 saw the premium Europe Sports and Gaming assets return to growth while the North America business continued to add new media partners which expanded its portfolio.

 

The Board confirms it had been in discussions with potential acquirors regarding the possibility of a sale of 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, the Board stated it was exploring the opportunity to create shareholder value through possible asset sales and had some early discussions with potential purchasers, albeit no sale was completed at the time. 

 

 

3. USES OF PROCEEDS AND FINANCIAL BENEFITS TO THE GROUP OF THE DIVESTMENT

 

In FY23, the Assets are expected to have contributed unaudited Revenue of $21.4 million and Adjusted EBITDA of $6.6 million respectively. As of 31 December 2023, the Assets had an unaudited balance sheet valuation of approximately $15.4 million.

 

In FY22, the Assets are estimated to have contributed Revenue of $22.1 million and Adjusted EBITDA of $7.0 million respectively. As of 31 December 2022, the Assets had an audited balance sheet valuation of approximately $25.9 million. This valuation included three of the Group's Europe Gaming domains and associated websites, Casino.se, Casino.gr, and Casino.pt which were sold in July 2023 for approximately $4.0 million.

 

The net proceeds from the Fixed Consideration are expected to be approximately $35.0 million at completion after relevant adjustments including estimated transaction costs, settlement of transition costs and reorganisation costs ("Net Cash Proceeds").

  

The Board intends to use the Net Cash Proceeds to pay the final deferred acquisition payment of $4.0 million due in 2024, provide working capital for the North America business and settle outstanding tax provisions while returning significant cash to shareholders.

 

 

4. UPDATE ON RETAINED GROUP AND FUTURE STRATEGY

 

Following completion, the Group will be reorganised to support the North America business (the "Business").

 

The Group's strategy for North America remains to expand the Sports footprint, deepening audience relationships and diversifying revenue streams with the goal of more predictable, stable income. Additionally, the Business will seek to drive Gaming 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. The Group does not have any current plans for acquisition in North America.

 

XLMedia's Board will continue to execute the delivery of this strategy whilst continually evaluating ways to maximise shareholder value.

 

 

5. DETAILS OF THE TRANSACTION AND PURCHASE AGREEMENT

 

The Company and XLMedia Publishing Limited (together the "Sellers"), have entered into a binding Asset Purchase Agreement (the "APA") with the Purchaser in relation to the Assets.

 

Pursuant to the terms of the APA, the Sellers are to sell the Assets, which comprise of a portfolio of domains and certain contracts, intellectual property rights and operator accounts required for the use and operation of those domains. 

 

Completion of the APA is in all respects conditional upon both (1) no material adverse change occurring in the operation of the Assets during the period between signing and completion of the APA and (2) other usual completion conditions.

 

The Fixed Consideration of $37.5 million is payable in cash in three installments as follows:

·    the first installment of $20.0 million being payable on the completion anticipated to be on 1 April 2024;

·    the second installment of $10.0 million on the six-month anniversary of closing; and

·    the final installment of $7.5 million together with any Earnout Consideration (up to a maximum of $5.0 million) on the one-year anniversary of completion.

 

The Company will give customary seller fundamental and business warranties and provide certain indemnity protection to the Purchaser which are all subject to financial caps.  

 

 

For further information, please contact:

 

XLMedia plc

David King, Chief Executive Officer

www.xlmedia.com

 

 

ir@xlmedia.com

via Vigo Consulting

Vigo Consulting

Jeremy Garcia / Fiona Hetherington / Kendall Hill

www.vigoconsulting.com

 

Tel: 020 7390 0233

Cavendish Capital Markets Limited (Nomad and Broker)

Giles Balleny / Callum Davidson

www.cavendish.com

Tel: 020 7220 0500

 

About XLMedia

 

XLMedia (AIM: XLM) is a leading global digital media company that creates compelling content for highly engaged audiences and connects them to relevant advertisers.

 

The Group manages a portfolio of premium brands with a primary emphasis on Sports and Gaming in regulated markets. XLMedia brands are designed to reach passionate people with the right content at the right time.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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