GiG completes $56M Sportnco acquisition; combined company to unlock expanded reach

iGaming technology company Gaming Innovation Group (GiG) has completed the acquisition of sportsbook provider Sportnco Gaming, the business announced on Friday. GiG first signed a Share Purchase Agreement to acquire the online gaming company in December last year.

GiG has now received the necessary approvals from relevant authorities, and thus its Board of Directors resolved to complete the acquisition and to issue new shares to the shareholders of Sportnco and to SkyCity Entertainment Group. GiG had previously entered into an agreement with SkyCity whereby the group would, subject to final completion of the acquisition, invest €25 million ($27.5 million) to finance the main part of the cash consideration.

Gaming Innovation Group expects the combined company to “enhance and strengthen GiG's position as one of the industry-leading platforms and media providers” with innovative and proprietary products, while also creating one of the largest and fastest-growing providers in regulated iGaming.

The Nasdaq Stockholm-listed business describes Sportnco as one of the leading platform providers of turnkey betting and gaming solutions for operators in regulated markets, through its in-house developed sportsbook and PAM.

We are happy to share the news that we have now completed the acquisition of leading tier 1 sportsbook @Sportnco2 $GiG#IGamingNews #Sportsbook #Sportsbetting #Platform #OnlineGaming https://t.co/lrrwVlr3Wu

— Gaming Innovation group (GiG) (@GIG_online) April 1, 2022

The sportsbook provider has an international presence, operating as a B2B supplier in a range of European jurisdictions including France, Spain, Belgium, Portugal and Greece. It is also present in several high-growth Latin American markets and, according to GiG, well-positioned “to enter the US sportsbook lead states.”

Sportnco’s geographic presence is “highly complementary” to GiG’s current offering, according to a press release, and combined, GiG and Sportnco will be licensed in 25 markets, currently with around 55 clients. Through the acquisition, GiG has increased both short- and long-term addressable markets “meaningfully.”

“Sportnco's tier 1 sportsbook product is strong, and the acquisition is expected to create attractive commercial, operational, and technological synergies, as well as enable cost savings and accelerated growth,” the company said in a statement. The combined company will have “increased profitability, value proposition with ever-increasing growth prospects and further diversification of revenue and geographical reach.”

Integration outlooks

Through the acquisition, GiG has strengthened its position in the platform and sports segments of the iGaming industry. The company issued an outlook update, and now sees “multiple possibilities going forward” by increasing its product portfolio, set to drive toward a profitable and cash-generating business segment.

"It is with tremendous excitement that we now step forward into the next chapter in GiG's history,” said GiG CEO Richard Brown. “The team at Sportnco has built a tremendous business, one that is highly complementary to GIG's offering both in product but also addressable market increase, and now the work begins to realize the truly existing growth opportunities that the business combination can pursue.”

The purchase follows GiG’s Media Services' strong performance over the last two years, delivering high growth levels, increasing diversity of earnings and healthy cash flow. For the full year 2022, the combined operations should generate revenue of €87-93 million ($96-102.7 million) with an EBITDA of €30-35 million ($33.1-38.6 million).

"Together with all the teams and shareholders who have built the success of Sportnco and Tecnalis, we are extremely proud of the journey we have accomplished since 2008, and of our integration today into the GIG group,” said Hervé Schlosser, CEO and founder of Sportnco. “I look forward to opening this new chapter as I am confident that, together, we will offer stronger technology solutions for our customers in the fast-growing regulated markets."

GiG’s Board of Directors will have “a strong focus on overall operations” going forward, including the post-merger integration of Sportnco, and “will continue to look at possible strategic options” to increase shareholder value in the future.

Transaction details

Gaming Innovation Group has now acquired 100% of the shares in Sportnco for a consideration of €51.4 million ($56.7 million), of which €27.9 million ($30.8 million) was paid in cash and €23.5 million ($25.9 million) in new shares in GiG. Additionally, Sportnco will retain €18.6 million ($20.6 million) of its existing long-term loans.

GiG is now issuing 25,110,900 new shares to the shareholders of both entities, thus increasing the number of outstanding shares to 122,786,526. The shares issued to the shareholders of Sportnco are subject to a 6-month lock-up period. Sportnco founder and CEO Hervé Schlosser will hold a 1.6% share in GiG, while SkyCity will hold a total 11% share.

Sportnco is delighted to be joining Gaming Innovation Group! Sportnco-GiG means operations in 25 regulated markets, working with 55 live clients, including many tier 1s and strong local players across Europe, the US and LATAM.#igamingplatform, #sportsbook #mediaservices https://t.co/79AjBrffuM

— Sportnco.com (@Sportnco2) December 22, 2021

Additionally, the shareholders of Sportnco are entitled to a two-year earn-out based on the performance in 2022 and 2023, with up to €11.5 million ($12.7 million) per year. The earn-out is to be paid 50% in cash and 50% in new shares in GiG.

Further, in an effort to keep key employees in Sportnco, GiG says a 3-year option program will be entered into, whereby the option holders, pending continued employment, “will receive shares in GiG at future VWAP valuation up to a total aggregate value of €4 million ($4.4 million).