FansUnite Entertainment Inc. disclosed today the signing of a definitive agreement to sell its wholly-owned subsidiary, FansUnite US Inc., to GeoComply Solutions Inc. and Hero Group Corp. for an aggregate purchase price of US$37.5 million. The sale is structured on a cash-free, debt-free basis, with anticipated net proceeds to FansUnite of approximately US$20 million following adjustments and the settlement of obligations. The closing date for the transaction is expected around August 15, 2024.
Impact on shareholders:
Upon completion, Hero Group will be majority-owned indirectly by Betting Hero’s co-founders, Jai Maw and Jeremy Jakary, with GeoComply holding the remaining stake. A substantial portion of the net proceeds is slated to be distributed to FansUnite’s shareholders. The estimated distribution will range from approximately C$0.065 to C$0.075 per company share.
Quinton Singleton, an independent member of FansUnite’s board and Chair of the Special Committee overseeing the transaction, emphasized in the company’s press release, “Following review of the Transaction by the Special Committee, we believe that this Transaction represents the best available path forward for the Company, its shareholders and other stakeholders.”
Scott Burton, CEO of FansUnite, added, “After a comprehensive strategic evaluation, we’ve received a significant cash offer for our primary remaining asset. It reflects high market multiples and a substantial premium to our current share price. We believe it’s in the best interest of our shareholders to recommend the sale and allow them to vote on a return of capital.”
The Board of Directors unanimously approved the Stock Purchase Agreement, considering the recommendation of the Special Committee. The Special Committee concluded that the transaction was fair and beneficial to shareholders (excluding the Betting Hero Co-Founders).
Reasoning behind the transaction:
The purchase price represents a favorable valuation relative to market comparables, with the projected distribution offering immediate liquidity and value certainty to shareholders.
BDO (Canada) LLP provided an independent valuation and fairness opinion, affirming that the transaction terms are fair from a financial standpoint. Key stakeholders, including directors, senior officers, and significant shareholders, have agreed to support the transaction. Also, the transaction structure includes safeguards under regulatory frameworks to protect minority shareholders’ interests.
Under the Stock Purchase Agreement, GeoComply will pay US$30.6 million in cash upon closing, with an additional US$6.9 million satisfied through the cancellation of a Demand Note. Post adjustments and settlement of obligations, FansUnite anticipates retaining approximately US$20 million in net proceeds, a substantial portion of which will be distributed to shareholders.
The transaction marks a strategic pivot for FansUnite Entertainment Inc., enabling it to unlock shareholder value by selling FansUS. With rigorous evaluation and support from key stakeholders, including comprehensive advisory and legal oversight, the company aims to execute the transaction efficiently and transparently. Shareholders will receive detailed information through the management information circular, facilitating an informed vote at the upcoming special meeting.
FansUnite Entertainment anticipates filing comprehensive documentation regarding the transaction on SEDAR+, ensuring shareholders have access to all pertinent details before the meeting in August 2024.