XLMedia 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 to Gambling.com Group Limited 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.

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 millionbased 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.

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.”