XLMedia PLC announced on Monday (21) that it has entered into a conditional sale agreement of its North American businesses to Sportradar AG, turning the company into a 'cash shell' (those whose assets consist mostly or entirely of cash) upon completion. The contract, subject to shareholder approval on November 7, will cost Sportradar US$ 20 million upfront and up to an additional US$ 10 million to be paid in April next year, depending on performance.
Sportradar is set for a US$ 30 million acquisition of XLMedia's North American businesses, whose growth "did not match" the original plans. The deal follows that of XLMedia's European businesses in March this year for up to US$ 42.5 million.
XLMedia stated that, although it was confident that the US market would provide "long-term success" for a larger organization, the board believes that the "current scale of XLMedia on a standalone basis may impact its ability to compete in the evolving American market".
“Furthermore, the board is also aware that, following the divestiture of Europe, the ongoing North American businesses may be considered too small to remain listed”, the company added.
“The board, management, and team have worked hard to successfully integrate the three acquired entities to create the North American business, including developing the Media Partners business and strong relationships with major US operators. However, the growth of its revenue streams in the US did not match the original plans of the group”.
XLMedia said that Sportradar's offer presents a “fair net present value” for the future revenue and profitability of the standalone North American business.
Marcus Rich, chairman of XLMedia, commented: "In an ongoing commitment to maximize shareholder value, following the divestiture of Europe, the Board is pleased to have reached an agreement to sell the North American Business to Sportradar, pending shareholder approval.
“We anticipate an initial distribution of net profits to shareholders before the end of the year".
The estimated revenue and adjusted EBITDA for 2023 attributable to the North American businesses for the year ending December 31, 2023, were US$ 27.5 million and US$ 5.5 million, respectively.
Source: GMB
