The acquisition of the remaining 40% of the shares will be paid through a €22m cash consideration and the remaining part in shares or cash. Both components will be transferred no later than December 31, 2021. This brings the expected transaction price for 100% of the shares in RotoGrinders Network to a total of €51m, equivalent to 7.5x the expected 2021 EBITDA. The purchase price of the remaining shares is dependent on financial performance in 2021 and the final price will be adjusted accordingly once financial results for 2021 have been announced. Better Collective and the selling shareholders had mutual options to buy and sell the shares in the period 2022-2024, however, the decision has now been made to accelerate the purchase and complete it in one transaction.
The decision to accelerate the remaining share purchase is fuelled by the strong growth in RotoGrinders and the entire US business. The full acquisition will provide a strong platform for future growth, supported by underlying US market growth and synergies between RotoGrinders and the other BC US assets that now can be fully realised. Since Better Collective acquired the initial 60% in May 2019, RotoGrinders has seen significant growth within sports betting as well as daily fantasy sports (DFS). Sports betting is driven by sportshandle.com and the usbets.com network, whereas DFS is driven through the leading US DFS brand, RotoGrinders.com. Since the initial share acquisition, the following growth rates have been recorded:
- 2021 revenue more than doubled since 2019 (2.2x), based on a 47% compound annual growth rate
- 2021 EBITDA is 4.4x higher than 2019, growing at a 109% compound annual growth rate
The strong growth is expected to be accelerated further, both as a consequence of more states regulating online sports betting and due to synergies between the RotoGrinders Network and other Better Collective assets, such as Fantasy Labs (DFS), Action Network, vegasinsider.com and Scores And Odds. Synergies are of both product and commercial nature. The DFS and other subscription-based assets (such as Action Network and VegasInsider) will continue to be key revenue generators throughout the US, also in states where sports betting remains to be regulated. The US sports betting market is, according to Vixio, expected to grow from a Gross Gaming Revenue (GGR) of ~$2.5bn in 2021 to ~$5.8bn by 2023. By 2030 the market is expected to exceed $40bn GGR. Five of seven of the original founders and shareholders of the RotoGrinders Network, will remain employed in Better Collective and two will continue in advisory roles.
The difference between the new estimated purchase price of the shares and the contingent liability recorded in the balance sheet as of June 30, 2021 is €11.5m and will be disclosed under Special Items in the Profit and Loss account in the Q3 2021 report in accordance with IFRS. The transaction has no impact on the financial guidance for 2021.
Marc Pedersen, CEO of Better Collective US, says: “We are pleased to settle the full acquisition of the RotoGrinders Network earlier than originally planned. Since the initial acquisition, we have been impressed with the RotoGrinders team and we are excited to now welcome them to the broader Better Collective family and pursue all synergies to the fullest. Furthermore, we are pleased to keep the now previous shareholders in Rotogrinders engaged in Better Collective with the opportunity to benefit from their competences more widely in the organisation.”
Cal Spears, CEO of Rotogrinders, says: “Joining Better Collective a few years back helped us fully unlock the potential of the RotoGrinders network. We’re proud to announce that our significant growth has led to an accelerated acquisition and that our team of 50+ will be fully integrated into Better Collective US going forward. All seven of the original RotoGrinders network shareholders and co-founders are now assuming full time or advisory roles. Better Collective is perfectly positioned for US growth and we’re excited to help realise its potential.“