Earnings+More - Deal Talk - September
Deal Talk - SeptemberCatena Media’s strategic review, the month in transactions, where next for gaming SPACs? +More.
Welcome to this month’s edition of E+M’s monthly newsletter Deal Talk, discussing what’s being spoken about away from the earnings announcements and analyst calls of the betting and gaming sector. In this issue:
A rundown of the status of betting and gaming-related SPACs. Catena Media’s strategic reviewIn early August, the Stockholm-listed super affiliate expanded the scope of its strategic review to include its entire European operation alongside its financial affiliate business. This followed the news in May that Catena has “received enquiries” about its AskGamblers and Ask Traders brands. Roll up, roll up: The potential unbundling of Catena’s European empire would represent a reverse from the previous policy pre-2018 of rolling up a host of smaller gaming-focused affiliate businesses.
Tough: Meanwhile, the European backdrop – regulatory issues in Sweden, the UK, Germany and the Netherlands, for instance – have made life as tough (if not worse) for gaming affiliates as for operators. On the Q2 earnings call, CEO Michael Daly suggested the European business was “feeling the macro impact more”. 🚨Catena Media share price YTD **Sponsor’s message** Venture capital firm Yolo Investments manages €550m in capital across 80 of the most exciting companies in fintech, gaming & blockchain. The Gaming Fund, regulated by the Guernsey Financial Services Commission, a dedicated 29-company, €183m AUM portfolio has invested in fast-growth assets including Dabble, Kalamba, SimWin & ThriveFantasy. Yolo Investments has just opened its fund to new investors as it looks to scale new cutting-edge concepts, including its exclusive high-roller land and live casino brand, Bombay Club, global banking network & OTC desk Aims Group. Catena in the USPlay it as it lays: It was another acquisition from its roll-up period, the deal to buy PlayNJ and related assets in December 2016 for up to $45m, that has arguably been the most consequential, giving Catena the platform for its current US-focused strategy.
Pure playBurns after reading: It is the uneasy balancing act between a growing US business and a moribund European arm that lays behind the strategic rethink being undertaken, according to sources, by Oakvale Capital.
Off the pace: Notably, the Catena Media valuation has fallen behind both long-standing rival – and also Stockholm-listed – Better Collective, as well as the more recently US-listed Gambling.com.
Gaming affiliates P/E ratios
Dual purpose: A sale of all of the European businesses would simplify Catena’s focus while also enabling it to pay down some of its debt load. As of the end of Q2, it had €55m of floating rate bonds outstanding, a €16.7m term loan and a €10m revolver.
Buyer bewareOver to you: Oakvale now faces the problem of finding a buyer from a reasonably short list of potentials, whether listed or private. “The circle is really small,” in the words of one source.
More than just scraps: “Catena left a lot of value on the table with all these assets, because of the speed with which they rolled them up,” says one source. “They just weren't able to realize the synergies that were originally identified.”
👀On the Gambling.com earnings call, CEO Charles Gillespie said: “We still have a preference for US M&A, but we wouldn’t be doing our job if we didn’t also consider the attractive European M&A targets that are out there.” The future for CatenaUp sticks: Despite the obvious expense and organizational hurdles of the listing in Stockholm and attempting to list again in New York, the advantages would still be attractive.
Still, there are unresolved issues around the admitted reliance on social casino in the US, the potential for a slowing rollout of sports-betting and the lack of progress on further iCasino liberalization. The month in transactions
Decline and fall – Lottery.comOne-way ticket: As detailed in yesterday’s newsletter, the short but eventful listed life of Lottery.com appears to be nearing some kind of terminal stage after the Term Sheet for a convertible loan of $2.5m and another $50m of follow-in capital came with the stipulation that four board members, including founder Tony DiMatteo, resign.
A bad look: One source suggested, before the latest boardroom ructions, that Lottery.com had the look of scandal about it. “There are too many things like that that have happened for the SEC not to say, ‘this is shady business’,” they suggested.
Anatomy of a (financial) scandal
Where now for gaming SPACs?And then there were three: The outstanding possible betting and gaming SPACs situations are now at various stages of progress with Allwyn being the one most likely to succeed in getting to actually list. Allwyn/Cohn RobbinsDucks in a row: Following the news last week on Camelot ending its appeal over the awarding of the UK national lottery license, the shareholders of the Cohn Robbins SPAC overwhelmingly voted in favor of the deal on Friday. CaliPlay/TekkorpNo hay trato: That leaves two where the future is far less certain. As was detailed in last month’s Deal Talk, the chances of the planned Tekkorp de-SPAC via a deal with Playtech and Caliente/CaliPlay appears to have turned to dust after Playtech called a halt to talks. Novibet/ArtemisIn the hunt: The final one is the deal that would bring Novibet to market. Announced in late March, the company said it would be merging with the Artemis Strategic Investment Corporation SPAC and list on the Nasdaq at a valuation of $625m. However, since then the news has gone quiet. As one source said of the deal, “it’s not a dripping roast”. Over and outA rat trap: Whatever the reasons – and there are many – it is safe to say the SPAC boom is over. Sources point out that the calculations around a SPAC were about raising PIPE money. “That disappeared first,” says one source.
Further SPAC readingIt could be worse: SPAC investors throw out Trump's merger plan. Of note👀 Chris Grove starts a new position as operating advisor at Arctos Sports Partners. Contact us
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