XLMedia has reached a conditional agreement to sell its North America business assets to Sportradar for a total value of up to $30 million. This transaction represents a significant strategic decision for XLMedia, focusing on unlocking shareholder value through the sale of a core asset.
XLMedia Sells North America Business to Sportradar for Up to $30 Million
Deal Overview: Terms and Conditions of the Agreement
The agreement includes an upfront payment of $20 million, with an additional $10 million to be paid by April 2025, contingent on the performance of the North America business post-transaction. The deal is expected to be finalized after receiving shareholder approval at a General Meeting on 7 November 2024. This transaction marks a crucial turning point for XLMedia as it moves towards transforming its business structure.
XLMedia’s Strategic Shift: Becoming a Cash Shell
Upon completion of the sale, XLMedia will transition into a cash shell under AIM Rule 15, meaning it will focus solely on distributing the proceeds from this sale and a previous transaction involving its European and Canadian assets. This shift underscores the company’s commitment to delivering value directly to its shareholders. The combined proceeds from both transactions, including this sale to Sportradar, could reach up to $72.5 million before accounting for costs and liabilities.
This transformation represents a calculated step for XLMedia, whose board has determined that selling the North American business assets will unlock the best value for shareholders. While the North American market offers long-term growth potential, the company’s current scale, in the Board’s view, limits its competitive edge in the region.
Financial Performance and Valuation of the North America Business
The North America business has been a key component of XLMedia’s operations, contributing an estimated $27.5 million in revenue and $5.5 million in adjusted EBITDA in 2023. This transaction with Sportradar values the business at roughly 5.5 times its adjusted EBITDA, highlighting a substantial return on investment.
Sportradar’s decision to acquire these assets positions them as a stronger competitor in the North American market, leveraging XLMedia’s digital footprint and expertise to enhance their offerings. This acquisition allows Sportradar to expand its presence in the growing U.S. sports betting and gaming markets, which have seen considerable growth following legislative changes in recent years.
Impact on Shareholders: Distribution of Proceeds
The sale of the North America business is expected to generate significant returns for XLMedia’s shareholders. Chairman Marcus Rich commented on the importance of this move, noting that it aligns with the company’s commitment to maximizing shareholder value. Rich further stated, “Following the Europe Disposal, the Board is pleased to have reached an agreement to sell the North America Business to Sportradar, pending shareholder approval.”
Once the transaction is completed, XLMedia intends to distribute an initial portion of the net proceeds to shareholders before the end of the year, offering a tangible benefit from the company’s strategic decisions. This move will be followed by further distributions once additional proceeds are secured, ensuring a steady return for investors.
Previous Transactions and the Road Ahead for XLMedia
This sale follows a previous deal involving the disposal of XLMedia’s European and Canadian assets, part of a broader strategy to streamline operations and refocus on delivering value to shareholders. Together, these two transactions could bring the total proceeds up to $72.5 million, a significant liquidity boost for the company.
While the North American market presents opportunities for long-term growth, XLMedia’s decision to sell these assets is rooted in the belief that its current size limits its ability to compete effectively. By transitioning into a cash shell, the company is prioritizing a model that enables it to return proceeds directly to shareholders and restructure its future business focus.
Sportradar’s Expansion in North America
For Sportradar, this acquisition is part of its broader strategy to strengthen its position in the rapidly evolving North American gaming and sports betting markets. The purchase of XLMedia’s North American business allows Sportradar to diversify its offerings and tap into the growing consumer base in the region. As sports betting continues to gain momentum across the U.S., Sportradar is positioning itself as a key player, and this acquisition is expected to contribute to its expansion goals.
Sportradar’s integration of XLMedia’s digital marketing capabilities and established audience provides the company with the tools it needs to capitalize on the increased demand for online gaming and sports betting services. By acquiring these assets, Sportradar can accelerate its growth while enhancing its competitive position in the North American market.
Conclusion: A Move for Both Parties
The sale of XLMedia’s North America business to Sportradar represents a strategic decision that benefits both companies. For XLMedia, the sale unlocks value for shareholders and allows the company to focus on distributing proceeds from its asset sales. For Sportradar, the acquisition strengthens its market presence and provides a foundation for future growth in the U.S. sports betting industry.
FAQs About XLMedia’s Sale of North America Business to Sportradar
1. What is XLMedia selling to Sportradar?
XLMedia is selling its North America business assets to Sportradar for a total of up to $30 million. This deal includes an upfront payment of $20 million, with an additional $10 million payable in April 2025, contingent on the business’s performance.
2. Why is XLMedia selling its North America business?
XLMedia’s Board determined that selling the North America business would deliver the best value to shareholders. The company believes its current scale limits its competitive position in the region, and selling these assets will allow it to unlock value and distribute proceeds to shareholders.
3. What will happen to XLMedia after the sale?
After the sale is completed, XLMedia will become a cash shell under AIM Rule 15. The company will focus on distributing the proceeds from the sale of its North America business and a previous sale involving its European and Canadian assets.
4. How much revenue did XLMedia’s North America business generate in 2023?
In 2023, XLMedia’s North America business contributed approximately $27.5 million in revenue and $5.5 million in adjusted EBITDA.
5. What is the total value of XLMedia’s North America business in this sale?
The sale values XLMedia’s North America business at around 5.5 times its adjusted EBITDA, highlighting the strength of the business in the region.
6. How will XLMedia use the proceeds from this sale?
The proceeds from this sale, combined with the Europe Disposal, will be distributed to shareholders. XLMedia has indicated that an initial distribution will be made before the end of the year, with further distributions following after additional proceeds are secured.
7. What is the role of Sportradar in this transaction?
Sportradar is acquiring XLMedia’s North America business to strengthen its position in the growing U.S. sports betting and gaming markets. This acquisition is part of its broader strategy to expand its presence and leverage XLMedia’s digital marketing assets.
8. When will the sale be finalized?
The sale is expected to be finalized after shareholder approval at a General Meeting on 7 November 2024.
9. What will be the total value of XLMedia’s transactions?
Including the sale of its European and Canadian assets, XLMedia’s combined proceeds from both transactions could total up to $72.5 million before costs and liabilities.
10. How does this sale benefit Sportradar?
This acquisition allows Sportradar to expand its footprint in the North American sports betting and gaming industry by integrating XLMedia’s digital assets and expertise, enabling it to better serve the growing market demand.
