Digital media company XLMedia (LON: XLM) is selling European and Canadian gaming assets to Gambling.com for an initial $37.5m with potential deferred consideration of $5m. Some of this cash may be paid out to shareholders.
These assets generated 2023 revenues $21.4m and underlying EBITDA of $6.6m. Estimated group 2023 revenues are $50m and EBITDA is $12m, so this is a significant proportion of the business. AIM-quoted XLMedia will retain cash, debtors and liabilities of the assets after the disposal.
Pro forma net cash is likely to be around $35m, after taking account of deferred consideration of $4m payable for past acquisitions.
The cash not distributed to shareholders will be reinvested in the US sports and gaming marketing business, which has been part of the group since 2020. There are plans to move to revenue share agreements with betting companies rather than fixed fees. There will also be invest in US gaming websites, which do not have the seasonality of sports.
Cavendish estimates that XL Media is worth £48m, including the cash. The share price has bene on the slide for about two years. It has bounced back 96% to 12.25p, which values the company at £31.8m.
