Endeavor Group has secured a re-evaluation of its acquisition of OpenBet from Light & Wonder for $400m less than the originally proposed value.
The original terms agreed upon between Endeavor and Light and Wonder valued OpenBet at $1.2bn, broken down into $1bn in cash and 7.6 million newly issued shares at a market value of $200m.
However, the two parties have now agreed to a new price for the sportsbook platform provider of $800m, a 33% decrease on the original value. Broken down, Light and Wonder will receive a $750m cash settlement and a $50m reward of Class-A common stock.
Light and Wonder note that the amended fee is a “final step” to a streamlined portfolio, providing “a strong valuation in the current market” while increasing the speed and certainty of closing.
This includes an agreement by Endeavor to waive the closing condition requiring regulatory approval by the Nevada Gaming Control Board if required.
“Endeavor is the right partner for OpenBet and the amended agreement increases speed and certainty by creating a simplified path to closing the transaction while unlocking substantial benefits for OpenBet and Light & Wonder,” commented Barry Cottle, President and CEO of Light & Wonder.
“OpenBet demonstrates continued momentum across their key markets and the amended terms of the transaction provide strong value for the business.
“The significant cash consideration from the OpenBet sale will enable us to further de-lever our balance sheet and achieve our targeted net debt leverage ratio range of 2.5x to 3.5x.”
The transaction is expected to close by the end of Q3 2022, subject to the remaining applicable regulatory approvals and customary closing conditions.
The recently completed lottery sale and the pending divestment of OpenBet will cumulatively generate approximately $5.6bn of estimated net after-tax proceeds.
Cottle added: “This transaction is the final step in our journey to streamline our organization as we deliver on our promises as the leading cross-platform global game company.
“The cumulative proceeds from our divestitures, as well as our double-digit growth profile and $1.4bn 2025 targeted consolidated AEBITDA resulting in strong cash flow generation, is expected to create tremendous value for our shareholders.
“Our enhanced financial flexibility will enable us to accelerate the return of significant capital to shareholders through our share repurchase program, while also investing in key growth initiatives.”