A number of B2C brand acquisitions

Gaming Innovation Group (GiG) has announced today it is selling a number of B2C brands to the Betsson Group in a deal set to be worth €31m ($33.6m).

Both parties signed a share purchase agreement divesting these assets. The Thrills, Kaboo, Guts, and Rizk brands will now move into the Betsson Group holdings. The payment for these brands will see €22.3m ($24.2m) worth of cash change hands in addition to a prepaid platform fee of €8.7m ($9.4m).

GiG will be using the funds to repay its SEK300 ($31m) million bond that expires in 2020. 

Platform Services to entail a long-term partnership

The two gambling operators will be long-term partners through GiG’s Platform Services.

total value of the acquisition could rise to about €50m

The said brands will still operate under the ownership of Betsson, albeit through the GiG platform, for at least the first 30 months after the deal is finalized. The initial two-year period will see Betsson pay a premium platform fee to GiG, depending on the net gaming revenue generated.

It is estimated that the total value of the acquisition could rise to about €50m ($54.2m) when all things are considered. 

Betsson’s gaming market expansion

Betsson is one of the major players in the European online gambling market. The Stockholm NASDAQ-listed company has taken on many brand-building projects over the years through acquisitions and organic means.

The Swedish operator currently offers online casinos, proprietary sportsbooks, and other forms of online gaming in a dozen nations in Central Asia and Europe. 

A shift in strategy for GiG

The sale of assets to Betsson follows GiG’s recent strategic review, which began in November 2019. The process has altered the direction of the group, whose goal now is to lower the complexity of the business and become more efficient.

GiG will have a lot more resources after selling its B2C vertical. It can now focus more of its attention on the growth of its B2B business to ensure consistent earnings and satisfactory profit levels. 

The company’s current focus is on its platform business. It appears GiG will also have its proprietary sports betting solution integrated into its platform offering. 

What the future holds

The deal between GiG and Betsson is expected to come to a close by April 2020. This will allow time for the relevant merger and gambling authorities to conduct their due diligence.

In the meantime, GiG will be looking to extend its repayment schedule to its bondholders from the original date of March 2020 to April 22, 2020. The extension will be possible in return for a 0.35% consent fee based on the bond’s nominal amount. 

2020 revenue expectations for GiG on completion of the deal are at €70-75m ($81m). EBITDA is set to be in the €14-17m ($18.4m) range.