Scientific Games Corporation (SGC) recently announced that it entered into a definitive agreement to sell its OpenBet sports betting subsidiary to global sports betting and entertainment firm Endeavor Group Holdings. As announced on September 27th, the transaction will cost a total of $1.2 billion in cash and stock.
Based on the terms of the OpenBet sale, Endeavour Group will pay $1 billion in cash to Scientific Games. The remaining $200 million will be paid to SGC in the form of Endeavor Class A common stock, per the average volume-weighted trading value of the said stock, for 20 trading days until September 24th, 2021. According to SGC's media briefing, the transaction is expected to close in Q2 2022 and will be subject to standard purchase price adjustments, relevant regulatory authorizations, and customary terms of closing.
In light of the new developments, Barry Cottle, the President, and Chief Executive Officer of Scientific Games Corporation said:
"This transaction represents the culmination of a thorough process to divest OpenBet in order to maximize value for our shareholders and rapidly advance our vision to become the leading cross-platform global game company. The transaction is a significant milestone towards optimizing our portfolio and de-levering the balance sheet to enhance our financial flexibility. It will position us to invest both organically and inorganically in key growth areas, particularly in content and digital markets. We are delivering on our promises and executing on our strategy to transform our company and unlock significant value for employees, customers and shareholders."
Jordan Levin, the Chief Executive of Scientific Games Digital arm, also chimed in and shared a few sentiments saying:
"We believe Endeavor will enable us to build on our exceptional track record of innovation and reliability and unlock even greater value for our customers and employees. Endeavor's deep industry relationships and global reach make them the ideal partner. Together, these companies will be well-positioned to capitalize on emerging trends to deliver even more innovative and tailored solutions to customers as we define the future of sports betting entertainment."
A Strategic Divestment Move for a Stronger SGC Digital Portfolio
OpenBet is one of the star online sports betting engine technology companies across the world. It is famed for offering a robust ecosystem of sporting content and technology, among other related services, to sports betting operators globally. As we speak, OpenBet is the most dominant B2B partner for sports betting in Canada, Australia, the UK, and the United States of America.
Additionally, the company is one of the top sports betting technology companies in the European and Asia Pacific markets. Until now, OpenBet boasts of a portfolio of more than 75 clients from different parts of the globe. In the USA alone, it serves a total of 24 sportsbooks that operate in 12 states and has an impeccable track record of 100% uptime throughout all key sporting events. Some of the top-tier sportsbooks powered by OpenBet include William Hill, Ladbrokes, SkyBet, WynnBet, FanDuel, and DraftKings.
Looking at the sheer volume of wagers that this sports betting engine tech giant handles, in 2020, it was reported to have processed about 3 billion bets. Additionally, during the UK Grand National Horse Racing Festival 2021, OpenBet processed over 50 million bets for Scientific Games' clienteles, a whopping 128% surge compared to the peak data recorded in 2019.
Despite this shining success for the technology platform, Scientific Games had to make the difficult divestment decision due to the increasingly debt-heavy balance sheet of the entire company. Besides, through this divestment move, the company is also looking to bring in more funds that are to be directed to its ever-growing digital offerings.
A Huge Stride Towards a Brighter Future for IMG ARENA
Through this purchase, Endeavor is now poised to cement its position in the highly competitive sports betting ecosystem, where it's well-anchored by its IMG ARENA subsidiary. IMG ARENA currently serves over 470 sportsbooks brands globally as an official provider of live video streaming services and data feeds for over 45,000 sporting events every year.
After formal confirmation of the OpenBet deal on September 27th, Ariel Emanuel, the CEO of Endeavor, voiced his excitement at the prospects of leveraging the new sports betting tech company as follows:
"OpenBet has built an incredible sports betting suite anchored in its best-in-class betting engine and now including expanded content, services, and products for sportsbooks and fans. This capability set is the ideal complement to our IMG ARENA sports betting business, which works directly with sports rights holders. We look forward to growing these businesses together to capitalize on the strong secular tailwinds in the sports betting ecosystem."
Bringing OpenBet and IMG ARENA will seamlessly construct a powerful end-to-end solution for streamlined delivery of leading-edge content, premium products, and innovative tech to sportsbooks, leagues, and federations globally. With that in mind, Endeavor's CEO further remarked that:
"OpenBet marks a strategic addition to our sports betting portfolio as we look to round out our technology and product offering for sportsbook operators and sports brands worldwide. The combination of OpenBet and our IMG ARENA business will enable us to expand our footprint across the entire sports betting value chain and further capitalize on the tremendous upside we see coming from this fast-growing global industry."