Published on: January 12, 2023, 03:23 am.
Last updated: January 12, 2023, 03:23.
Golden Matrix Group, Inc. (NASDAQ:GMGI), a developer of online gaming platforms, announced that it is acquiring MeridianBet Group for $300 million in cash and stock.
The deal, which is expected to close in the first half of this year, will expand Las Vegas-based Golden Matrix’s footprint in the fast-growing business-to-consumer (B2C) markets in Africa, Europe and Latin America.
Combined pro forma revenue of both companies is expected to exceed $100 million in FY2022, with EBITDA expected to be in excess of $22 million for the pro forma year ended October 31, 2022, making the combination attractive from a financially and profitably. ” according to a press release issued by the companies.
Golden Matrix has been looking for expansion opportunities and ways to add exposure to new international markets – boxes ticked by the acquisition of privately held MerdianBet.
Golden Matrix investors need convincing
As is often the case, the buyer’s shares fell on news of the acquisition, with Golden Matrix down more than 7% today on volume that was nearly four times its daily average.
Specific to Golden Matrix, today’s declines could be the result of profit taking as the stock is up 61% year to date. Investors may also be concerned about the $300 million price tag of the MeridianBet deal, given that the buyer’s market cap was just $117.18 million entering today. It’s well into micro-cap territory.
Investors may pass on the deal’s price point if the acquisition pays off for Golden Matrix. This is possible because the combined company could provide high growth.
“MeridianBet Group, with a strong B2C presence in the sports betting markets in Europe, Latin America (LATAM) and Africa – and revenue growth of over 38% year-on-year, fiscal year 2022 over 2021 – combined with business- to-business of Golden Matrix The (B2B) gaming platforms supporting over 6.8 million registered users are expected to result in complementary business aspects and significant market share growth for both companies,” the statement said .
Terms of the Golden Matrix/MeridianBet offer
Under the terms of the deal, MeridianBet investors will receive 65.3 million shares of Golden Matrix common stock valued at $3.50 each. That’s a small discount to today’s closing stock price of $3.80. The target also gets $70 million in cash.
“The strategic rationale behind the deal and becoming part of a Nasdaq-listed company is to be more competitive and successful in Brazil, the United States and other large markets – where entry for private companies is more difficult,” said Zoran Milosevic, CEO of MeridianBet. in the statement.
When the acquisition is completed, MeridianBet and related entities will become wholly owned subsidiaries of Golden Matrix and the name of the purchaser will remain in effect.