Sports betting media group Better Collective has sharpened its focus on the US further still having agreed to acquire 100% of the shares in New York-based sports content firm Action Network Inc for $240m on a cash and debt-free basis.
Action Network will be integrated within Better Collective US but will continue to operate as a separate business unit with its current brands. The management team and employees, led by CEO Patrick Keane, will report to Group Management through US CEO Marc Pedersen.
In a statement, Better Collective claimed that with the acquisition it will gain “clear market leadership within sports betting media and affiliation in the US”. Moreover, it anticipates growing its US revenues to more than $100m by 2022.
Launched in 2018, Action Network operates as a premium sports content and product destination for US sports bettors. A trusted source for sports fans, its media platforms provide an enhanced experience for its users through original sports news content, premium insights, deep menus of odds and proprietary betting tools and data.
The firm’s diverse revenue model includes a rapidly-growing affiliate marketing business focused on customer acquisition for betting operators in the US as well as subscription products anchored by Action Pro, Action Labs and Fantasy Labs.
Action continues to benefit from the expanding legal sports betting market in the US. In 2021, the company is expected to achieve revenues approaching $40m, an increase of over 100% year-on-year, while also generating positive operational earnings in 2021.
And as more states legalize online sports betting, the potential to further deepen and expand its commercial partnerships with large US-based sportsbooks such as BetMGM, DraftKings, FanDuel and PointsBet is significant.
Turning to the financial element of the deal, Better Collective confirmed that the $240m purchase price will be settled in a cash payment and a $12m issuance of new Better Collective shares to Action’s management, key employees and certain other individuals. $10m of the cash payment will be paid on a deferred basis as settlement of certain existing share options in Action.
Jesper Søgaard, CEO of Better Collective, stated: “I am thrilled to welcome Action and its employees to Better Collective. This acquisition, which is the largest in Better Collective’s history, gives us a leading position within affiliation in the US and a strong foundation for profiting from the continuous regulation of the US betting market.
“We add three new, very well positioned US sports media brands to our portfolio and welcome around 100 new colleagues, together representing an invaluable pool of knowledge and expertise on the US sports betting media market. By all accounts, this is a great day for Better Collective.”
Action Network CEO Keane commented: “Today marks a great achievement in the history of Action. In just a few years, our team has managed to build a leading sports betting product and media business in the US market, making us attractive to a leading international player. I am thrilled about this outcome for our employees and investors and we look forward to continuing to forge great relationships with our league, media and sportsbook partners.
“Under Better Collective’s ownership, we become part of a company with many years of experience and all the resources necessary to further grow our position and develop our offering, to ultimately enhance the betting and entertainment experience for sports fans. We gain new colleagues, career paths and perspectives. I’m looking very much forward to the journey ahead.”
In line with the acquisition, Better Collective has updated its financial targets for 2021, predicting total group revenue of more than $216m compared to original projections of more than $192m. Operating profit has also been upwardly revised from a projected $60m to $66m.
The acquisition of Action will also bring Better Collective’s estimated debt leverage above its financial target of <3.0. Due to the firm’s strong operating cash flow, the Board of Directors has decided that for the time being, it is acceptable for the company’s debt leverage to exceed the financial target of 3.0, which remains in place for 2021.