Better Collective seals its second largest acquisition to date with $188m Playmaker Capital move

Better Collective has agreed a cash-plus-shares deal to acquire digital media company Playmaker Capital for a total consideration of $188m (€176m/£152.8m).

Under the terms of the deal, the Copenhagen-headquartered affiliate and the Toronto-based firm will enter a structured arrangement in which Playmaker Capital shareholders will be able to choose to receive either C$0.70 in cash or 0.0206 shares of Better Collective stock per Playmaker common share.

These transactions are prorated and subject to an aggregate cap of 65% shares in Better Collective and 35% in cash.

Playmaker Capital shareholders who do not elect to receive cash or shares in Better Collective will be given by default C$0.245 in cash and 0.0134 shares in Better Collective.

The C$0.70 share price represents a premium of 46% on Playmaker Capital’s last closing price as of 3 November.

The total share consideration of 3,100,880 shares in Better Collective will be settled by the transfer of 1,387,580 treasury shares and up to 1,713,300 newly issued shares, determined by volume-weighted price of the firm’s shares over the last 10 days.

The cash consideration will be paid by existing cash and established bank credit facilities. Better Collective has confirmed it has received voting support from Playmaker Capital directors, officers and shareholders representing 49.8% of Playmaker’s outstanding common shares.

Following completion of the transaction, Playmaker Capital will be delisted from the Toronto Stock Exchange.

Playmaker’s two largest shareholders are Relay Ventures and JPG investments Inc, a holding company owned by Playmaker Capital CEO Jordan Gnat.

As part of the deal, JPG will roll a portion of its Playmaker Capital shares in exchange for Better Collective shares, at a higher consideration of 75% Better Collective shares and 25% cash.

Both shareholders have inked lock-up agreements to prevent the sale of Better Collective shares for a specified period.

The transaction is expected to close before the end of Q1 2024, with Playmaker Capital becoming part of the wider Better Collective group.

As its rationale for the “transformational” acquisition, Better Collective has cited the market exposure and leadership position in South America and the ability to enhance its North America operations via Playmaker’s existing reach.

Playmaker’s experienced leadership team, which includes a Fox Bet and Scientific Games veteran in CEO Gnat, was also highlighted by Better Collective as a compelling rationale for the deal.

The affiliate said there is a “clear path” to post integration synergies reducing its expected value/EBITDA multiple to below 5x by 2026, bringing it in line with Better Collective’s wider publishing EBITDA margin of +40%.

Better Collective has said that upon completion of the deal, it will revise its longer-term financial targets for 2023 to 2027.

“Acquiring Playmaker Capital is in many ways transformational for Better Collective and will be an important milestone in our journey towards becoming the leading digital sports media group,” Better Collective co-founder and CEO Jesper Søgaard said.

“Upon closing of the acquisition, we will significantly grow our audience and reach a larger segment of generalist sports fans.”

Søgaard continued: “For years, Playmaker Capital has built incredibly strong sports media brands and excited sports fans across the Americas with high-quality sports content, cultivating a loyal and dedicated following.

“The skilled team behind Playmaker Capital brings a unique set of media competencies that will boost our organisation. Saying that I am excited to welcome the new team to the Better Collective group would be an understatement,” the Better Collective CEO added.

Listed on the Toronto Stock Exchange, Playmaker Capital owns a substantial portfolio of media businesses focusing on the Americas, including Latam-facing Futbol Sites, US-based firm Yardbarker and Canada-facing media firm The Nation Network (TNN).

Futbol Sites garners an audience of more than 180 million monthly visits, while Yardbaker and TNN receive regular monthly visitors of 13 million and 6.5 million, respectively.

In addition to these brands, Playmaker Capital also operates Wedge, a paid media division with a core focus on the US market, which will be integrated into Better Collective’s paid media division upon completion of the deal.

As of Q3, Playmaker has reported trailing 12 months revenue of €55m with an EBITDA of €15m, operating with an estimated value/EBITDA multiple of 11.7x.

Speaking about the deal, Playmaker Capital co-founder and CEO Gnat said: “Over the past 12 months I have been talking a lot about a transformational deal for Playmaker and its shareholders that will take this company to the next level.

“Today’s announcement does exactly that and I could not be more excited for the Playmaker family to join the Better Collective family.

“Their success is undeniable and their vision to become the leading digital sports media group aligns with us exactly. The cultures of our companies are very similar and I see the integration and synergies to be incredibly accretive to shareholders,” Gnat added.