Vancouver, British Columbia--(Newsfile Corp. - November 23, 2021) - FansUnite Entertainment Inc. (CSE: FANS) (OTCQX: FUNFF) ("FansUnite" or the "Company"), is pleased to announce a definitive agreement dated November 22, 2021 (the "Definitive Agreement") pursuant to which the Company has acquired ("Transaction") the businesses and brands of American Affiliate LLC ("American Affiliate"). The Transaction will result in FansUnite securing a podium position in the U.S. online betting opportunity and will be the cornerstone of a larger U.S. affiliate strategy going forward.
American Affiliate Business
American Affiliate is a diverse collection of assets dedicated to generating new depositing customers for legal sportsbooks, online casinos, online poker sites, and adjacent products in the U.S. market.
American Affiliate's vision blends an exclusive focus on the U.S. opportunity with marquee brands, a powerful omni-channel approach, a deep portfolio of proprietary technology, and a uniquely proven management team.
Transaction Highlights:
- Accelerates Entry into U.S. Gaming Market: American Affiliates' Betting Hero brand is the #1 live activation company in the U.S. sports betting and online gambling market.
- Revenue and EBITDA Growth: American Affiliate has produced trailing 12 months unaudited revenue and EBITDA of US$13.1 million and US$6.0 million respectively.
- High-Value Customer Base: American Affiliate's assets have generated over 150,000 new depositing customers for legal U.S. online betting operators.
- Partnerships with Tier-One Sportsbooks: Partnerships with leading sportsbooks and casinos including BetMGM, DraftKings, FanDuel, PointsBet, Underdog Fantasy, WynnBet, and more.
- Strong Alignment with Existing Management and Shareholders: Consideration shares to be issued at a 42% premium to market price with share restrictions over a three-year period
- U.S. Pure Play: The only at-scale affiliate company focused primarily on the U.S. market.
- True Omni-Channel: A premier at-scale omni-channel affiliate in the U.S. market, combining marquee digital brands with a best-in-class live activation arm.
- Leading Intellectual Property Portfolio: Category-leading portfolio of proprietary technology.
- World-Class Executive Team: Tier-one executive and management team with a history of success and scale in the U.S. gaming market.
"The acquisition of American Affiliate represents the most significant milestone for FansUnite to date," said Scott Burton, CEO of FansUnite Entertainment. "This transformative transaction will provide us further access to the lucrative U.S. regulated sports betting and online gambling market while generating accretive, high-margin revenue, expanding our leadership team, and accelerating the growth of our company's footprint in the global gambling market."
"When we looked at how quickly the U.S market is expanding, it made clear strategic sense for us to enter the affiliate business as a way to partner with some of the largest gambling companies in the world," continued Scott Burton. "We will now own and operate an unparalleled customer acquisition portfolio, allowing us to leverage our technology, brands, and talent to immediately capture share in the U.S. sports betting and online gambling market."
Combined, the American Affiliate brands represent one of the most significant single sources of new depositing customers for legal U.S. sports betting and online gambling operators. The leadership team has over 40 years of combined experience in the regulated gambling industry, including senior roles at market leaders such as ACEP, Amelco, DraftKings, Catena Media, and GeoComply.
Brands, platforms, content, and services highlighted in the Transaction include:
"Legal U.S. sportsbooks and online casinos are spending billions of dollars to acquire and retain customers," said American Affiliate CEO Chris Grove. "Our brands, team, and technology allow us to capture a meaningful share of that marketing spend today while producing some of the highest margins in the U.S. online betting ecosystem."
"But that success is only a starting point," Grove continued. "We anticipate unprecedented near-term growth as legal online betting continues to expand into new states and new products. Joining with FansUnite was key to our strategy of aggressively scaling our business to meet that opportunity head-on."
Investor Call
The executive teams from FansUnite and American Affiliate will be hosting a webinar to discuss the transaction on November 29, 2021 at 1:00PM EST.
Please click the link to register:
https://us02web.zoom.us/webinar/register/WN_79sLLGvjTmm9x8JuPs681w
A presentation outlining the transaction can be found:
https://www.fansunite.com/press/american-affliate-acquisition
Transaction Terms
Pursuant to the terms of the Definitive Agreement, the Company will acquire all of the issued and outstanding shares of American Affiliate for total consideration of approximately US$58.2 million subject to a working capital adjustment (the "Purchase Price"). The Purchase Price is comprised of: (i) US$13.5 million in cash paid on closing; (ii) US$41.7 million in common shares of FansUnite, to be settled through the issuance of common shares of the Company (the "Common Shares''); (iii) deferred cash payments of US$3 million payable in twenty four months. In addition to the Purchase Price, the Definitive Agreement provides that the principals of American Affiliate may receive earn-out consideration to be calculated according to EBITDA targets with minimum margin guarantees each fiscal quarter for the three year period following closing.
For additional information on the terms of the Transaction, please refer to a copy of the Definitive Agreement which will be filed on SEDAR under the Company's profile within the prescribed timeframe.
The Purchase Price satisfied through the issuance of the Common Shares will be issued at CAD$0.75 per Common Share, representing a premium of 42% over the FansUnite Share closing price, and a premium of 39% over the FansUnite Share 10-day VWAP, as at November 19, 2021, the last trading day immediately prior to the initial announcement of the Transaction.
The Common Shares issued pursuant to the Transaction will be subject to a contractual lock-up ranging from up to 25% of the Common Shares released on months 4, 6, 9, 12, 15, 18, 21, 24, and up to 3.0% releasing on month 27, 30, 33, 36, pursuant to the terms of the Definitive Agreement.
Stifel GMP acted as financial advisor to FansUnite and DLA Piper LLP acted as legal advisor. Stifel GMP will be paid a fee in cash and 866,887 Common Shares for its services.
Roth Canada, ULC ("Roth")has provided a fairness opinion in connection with the Transaction to FansUnite's Board of Directors (the "FansUnite Board") to the effect that, as of the date of the opinion and based upon and subject to certain assumptions and limitations, the consideration payable by FansUnite is fair, from a financial point of view, to FansUnite. Roth will be paid a cash fee in exchange for its services.
A director of the Company, Chris Grove, is a "related party" of American Affiliate, therefore the Transaction is a "related party transaction" as such term is defined in Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Accordingly, the Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101, given that neither (A) the fair market value of the subject matter of, nor (B) the fair market value of the consideration for, the Transaction, insofar as it involves interested parties, exceeds 25% of the market capitalization of the Company, as determined in accordance with MI 61-101. The Transaction has been approved by the independent directors of the Company.
About FansUnite Entertainment Inc.
FansUnite is a global sports and entertainment company, focusing on technology related to regulated and lawful online gaming and other related products. FansUnite has produced a one-of-a-kind complete iGaming platform, with a sports and esports focus geared for the next generation of online bettors and casino players. The platform includes products for pre-match betting, in-play betting, daily fantasy, content and a certified RNG to produce casino style chance games. The platform operates multiple B2C brands and B2B software for the online gambling industry. FansUnite also looks to acquire technology platforms and assets with high growth potential in new or developing markets. The Company also provides technological solutions and services in the global gaming and entertainment industries. Its technology includes fixed/parimutuel odds, in-stream betting, live betting, casino-style games, cryptocurrency wallet and news content.
For further information, please contact:
Prit Singh, Investor Relations at FansUnite
ir@fansunite.com
(905) 510-7636
Scott Burton, Chief Executive Officer of FansUnite
scott@fansunite.com
Darius Eghdami, President of FansUnite
darius@fansunite.com
NEITHER THE CANADIAN SECURITIES EXCHANGE NOR ITS REGULATIONS SERVICES PROVIDERS HAVE REVIEWED OR ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE
This news release contains certain statements that may constitute forward-looking information under applicable securities laws. All statements, other than those of historical fact, which address activities, events, outcomes, results, developments, performance or achievements that FansUnite anticipates or expects may or will occur in the future (in whole or in part) should be considered forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or statements formed in the future tense or indicating that certain actions, events or results "may", "could", "would", "might" or "will" (or other variations of the forgoing) be taken, occur, be achieved, or come to pass. Forward-looking statements in this news release include, but are not limited to, statements with respect to the Definitive Agreement; the Transaction; FansUnite's position with the U.S. online sports betting market following the completion of the Transaction; certain transaction highlights, including American Affiliates' Betting Hero Brand's position as the #1 live activation company in the U.S. sports betting and iGaming market, American Affiliates' partnerships with certain sportsbooks and casinos including BetMGM, DraftKings, FanDuel, PointsBet, Underdog Fantasy, WynnBet; the Transaction providing the Company access to the U.S. regulated sports betting and online gambling market, generate accretive, high-margin revenue, expand the Company's leadership team and accelerate the growth of the Company's footprint in the global gambling market, and partner with some of the largest gambling companies in the world; statements made with respect to leverage the Company's technology, brands, and talent to immediately capture market share in the U.S. sports betting and online gambling market; statements made with respect to American Affiliate brands representing a significant source of new depositing customers for legal U.S. sports betting and online gambling operators; statements relating to the Transaction Terms, including the Purchase Price and cash and Common Shares payable to American Affiliate thereto; statements relating to the Transaction being considered as a "related party transactions" as such term is defined in MI 61-101; information pertaining to the advisors of the Company, including Stifel GMP, Roth Canada, ULC and DLA Piper (Canada) LLP.
Forward-looking statements are based on assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, including, but not limited to, expectations and assumptions concerning: interest and foreign exchange rates; capital efficiencies, cost saving and synergies; growth and growth rates; the success in the online gambling and sports betting industry; the regulatory environment applicable to online gambling and sports betting; the technological infrastructure and support needed to host the Company's online gambling and sports betting platforms and applications; any cryptocurrency applications to the Company's business; and the Company's growth plan. While FansUnite considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; risks associated with the Transaction; risks associated with the Definitive Agreement; risks associated with the regulatory environments in the jurisdictions the Company and the Target operate in; technology-related risks that could adversely effect the Company's ability to operate its online gambling and sports betting platforms and applications, risks related to the novel coronavirus (COVID-19) global pandemic and any effects it might have on the Company's business thereto. Readers are cautioned that the foregoing list is not exhaustive. For more information on the risk, uncertainties and assumptions that could cause anticipated opportunities and actual results to differ materially, please refer to the public filings of FansUnite which are available on SEDAR at www.sedar.com. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. FansUnite disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/104823