Sportnco fills the gap in GiG’s platform offering GiG’s sportsbook offering has not been performing in line with expectations, and we assess that some procurements has been lost as a result of a poor sportsbook. As Sportnco has a proven sportsbook offering with proprietary trading floor and risk management, GiG can fill the gap in its offering to win more contracts. Moreover, GiG can upsell the sportsbook to its existing client base for a turnkey offering. Price is not cheap, but synergies could be large With a price of EUR 70m in enterprise value (EUR 50.8m ex. debt) and expected EBITDA of EUR 5m, the price corresponds to a valuation of 14x EV/EBITDA 2021e*, which is higher than the group’s own valuation before the acquisition. Furthermore, earn-outs could further increase the price up to an additional EUR 23m. Albeit strong growth of 23-26% last two years, we assess the stand-alone price to at the upper end, but the synergies GiG expects could justify the acquisition given the strong upselling potential and enhanced turnkey offering with a complete solution. The management expects cost synergies of EUR 2-3m in opex in the first two years and reduced future investments in new markets in excess of EUR 3-4m as a result of Sportnco’s existing market presence being natural markets for GiG to expand in. Material dilution with double share issues The initial consideration of EUR 50.8m is paid with 46% shares and the additional 54% paid in cash, financed through further share issues. Excluding earn-outs, the current share price and EUR/NOK exchange rate implies a 28% dilution, and the potential earn-outs could increase dilution further. However, the acquisition is encouraging, as it fills a gap in its offering.* company estimates Läs mer på Introduce
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