Elys Game Technology buys US bookmaker under Bolt-On deal

Posted on: Jul 7, 2021, 1:04 a.m.

Last update on: July 7, 2021, 02:12 a.m.

Elys Game Technology (NASDAQ: ELYS), a provider of gaming technology, today announced the acquisition of Bookmakers Company US for $ 12 million in cash and equity.

Realization of books in the United States
Vic Salerno of US Bookmaking, seen here in 2017. His company is in the process of being acquired by Elys Game Technology. (Picture: Las Vegas Review)

While this is the initial price, Elys could ultimately distribute up to $ 53.8 million to the company known as US Bookmaking (USB), under various revenue clauses in the deal.

USB members will have the opportunity to receive up to an additional $ 38 million plus a potential bonus of 10% (or $ 3.8 million) based on the realization of certain earnings before interest, taxes, depreciation and amortization (EBITDA) over the next 4 years. , payable 50 percent in cash and 50 percent in shares, ”according to a statement issued by the companies.

Price supplements will be based on EBITDA measurements ranging from a loss of $ 213,850 this year to a positive amount of $ 19,441,483 for 2025.

The deal matches Elys’ plans to expand into the United States

The acquisition of US Bookmaking dovetails with Elys’ efforts to secure a foothold in the rapidly growing US sports betting market.

Founded in 2016, Las Vegas-based USB provides sports betting and advisory services to gaming companies. The solutions offered by USB include the design of physical sports betting, the development of mobile sports betting applications and in-game betting services.

Following the 2018 Supreme Court ruling on the Professional and Amateur Sports Protection Act (PAPSA), “USB began providing its services to the Santa Ana Star Casino in Albuquerque, New Mexico and expanded its presence in New Mexico with service provider agreements at Isleta Resort & Casino and Santa Claran Hotel & Casino. USB then expanded into Colorado on the Sky Ute property, followed by agreements with the Odawa Tribe in Michigan and the 4 Bear Tribe in North Dakota, ”according to the company.

USB also has a service agreement in Washington, DC that will come into effect later this year, and a skin for an interactive games company in Iowa.

Yawning Investors Elys

Elys shares jumped more than 4% at the start of the session on Wednesday when the transaction was announced. But the shares gradually sold off as the session progressed. At the end of the session, Elys lost more than 3%, extending its decline since the start of the year to 32%.

Still, some analysts believe Elys is inefficiently valued and could represent a story of value for premonitory investors. The company has positive cash flow and had $ 21.5 million in cash at the end of the first quarter. That’s an impressive sum compared to its market cap of $ 89.1 million.

“Early investors could be enticed by an action at an attractive price compared to market opportunities. Nevertheless, a long position in ELYS will require patience, because the economic model, even if it has been proven in the Italian market, will still require time to develop in the American market ”, notes analyst Debra Fiakas. “Investors will have to self-discipline not to expect immediate results in one or two quarters. “

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