LONDON: XLMedia (AIM: XLM), a sports digital media company, has announced a conditional asset purchase agreement (APA) to sell certain assets of its North America Business to Sportradar AG.
The deal, valued at up to $30 million, includes $20 million payable upon completion and an additional $10 million contingent on performance by April 2025.
Marcus Rich, Chairman of XLMedia, commented: “In an ongoing commitment to maximise shareholder value, following the Europe Disposal, the Board is pleased to have reached an agreement to sell the North America Business to Sportradar pending shareholder approval. We anticipate an initial distribution from the net proceeds to shareholders before year end.”
The transaction is subject to shareholder approval at the General Meeting on November 7, 2024, and is expected to close shortly after. Premier Investissement SAS and the Directors, who hold about 31.18% of the Ordinary Share capital, have pledged to vote in favor of the resolution.
Upon completion, XLMedia will become an AIM Rule 15 Cash Shell, focusing on distributing proceeds from the North America Disposal and the previously announced Europe and Canada assets sale.
The North America Business generated $27.5 million in revenue and $5.5 million in Estimated Adjusted EBITDA in 2023. The total consideration for the North America Disposal reflects an implied value of up to 8.8p per Ordinary Share and a multiple of 5.5 times Adjusted EBITDA 2023. Together with the Europe Disposal, total cash proceeds before costs and liabilities could reach $72.5 million.
XLMedia’s Board has been exploring strategic options to provide shareholder value. On December 15, 2023, it announced early discussions with potential buyers, recognizing that individual business values were not fully reflected in the share price. The Europe Disposal was announced on March 21, 2024, for up to $42.5 million.
Following the Europe disposal, the North America Business became the sole material asset, with the Board focusing on its growth.
However, the Board concluded that XLMedia’s current scale might limit its competitive ability in the evolving US market and considered the remaining business too small to stay listed.
The Board, management, and staff worked to integrate acquired entities, but US revenue growth did not meet expectations. The Group’s ability to fund further acquisitions was constrained by cash flow from past high-value market acquisitions, focusing instead on expanding its existing footprint and partnerships.
Sportradar’s offer is viewed by the Board as a fair valuation for the North America Business’s future revenue and profitability, considering its technology, relationships, and brands.
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