The transaction is subject to shareholder approval at a General Meeting on 7 November, and is expected to be finalised shortly thereafter.
Sportradar’s acquisition reflects a multiple of 5.5x the division’s 2023 EBITDA, with the total deal valuing XLMedia’s North American assets at up to 8.8p per share.
The acquisition will leave XLMedia, once a leader in the gaming sector, as a cash shell listed on the London Stock Exchange.
XLMedia’s decision to divest its North American assets follows a strategic review by the board, which found that the value of its individual business segments was not fully reflected in the company’s share price.
US struggles
Earlier in 2024, the company sold its European and Canadian businesses to Gambling.com Group for up to $42.5m.
In 2023, the North American business generated $27.5m in revenue and $5.5m in adjusted EBITDA.
When presenting the firm’s FY2023 results, XLMedia chairman Marcus Rich (pictured) already revealed that the company had received interest in its US assets, especially after the announcement of its European disposal.
Today, the company itted that the “growth of its US revenue streams did not match the group’s original plans.”
Despite its efforts to expand the North American division and develop key partnerships with major US operators, the business struggled to scale in the rapidly evolving US market.No cash for acquisitions
Part of the challenge stemmed from past acquisitions.
XLMedia noted that, over the past few years, its board, management, and staff have worked to integrate three acquired entities and establish a strong presence in North America.
However, the company disclosed that its obligation to fund these acquisitions using trading cash — particularly in a high-value market — limited its ability to pursue further acquisitions.
The business added that XLMedia’s “scale on a standalone basis” limited its ability to compete effectively in the US market.
The board therefore said it considers that Sportradar’s offer represents a fair net present value for the standalone North America business’ future revenue and profitability.
“We anticipate an initial distribution from the net proceeds to shareholders before year end,” Rich concluded.
Winding down
XLMedia further reavealed that trading in the company’s shares is likely to be suspended by May 2025, with XLMedia cancelling its listing thereafter since the company does not plan to make an acquisition that would qualify as a reverse takeover.
Once the final payments from the sales of the North American and European businesses are received, including any additional earn-out payments, the total amount could reach up to $72.5m, before deducting costs and liabilities.
Based on the current number of shares, this would mean a potential value of up to 21.2p per share.
This, XLMedia highlighted, is a significant increase compared to the share price of 6.6p on 15 December 2023, when the board first announced it was exploring the sale of assets to increase shareholder value.
