Codere targets Latam dominance in $350m SPAC merger
Spanish operator’s online division goes public in multi-million-dollar deal with DD3 Acquisition Corp II
Codere Online, the digital subsidiary of Spanish operator Codere Group, has agreed a SPAC merger with US-based DD3 Acquisition Corp II in a deal which values the business at $350m (£252.3m).
As a result of the agreement, Codere Online will become a publicly listed company and will be traded on the US Nasdaq stock market.
The existing Codere Online management team will continue operating the business and Codere Group will maintain majority ownership post-completion of the SPAC listing.
The transaction values the combined group 2.3x Codere Online’s estimated revenue for full-year 2022.
Discussing the deal, which is expected to complete in Q4, Codere Group CEO Vicente Di Loreto said: “We are proud of this deal, which will provide our online team with the financial resources required to grow Codere Online and take it to a new, higher level.
“It is a good signal of the value we have been able to create in the last three years boosting this business unit,” Di Loreto added.
Four separate institutional investors (DD3 Capital Partners, Baron Funds, MG Capital, LarrainVial) have each agreed to invest more than $67m in the business. The funds will close on completion of the SPAC merger.
New York-based investment firm Baron Funds has committed to rolling over approximately $10m of shares in the SPAC, an investment which will result in minimum transaction proceeds of $77m.
Mexico City-based DD3 Capital Partners will plough $125m of trust account cash into the business which will be used to fund business marketing expenditure, technology and platform improvements, as well as expansion into new markets.
A central pivot of this expansion revolves around using the firm’s existing business model in Spain and Mexico to further expand its market presence in operational areas including Colombia, Panama and the City of Buenos Aires.
The firm also said it has ambitions to be a “pioneer” of online gambling in soon-to-be-regulated markets including Brazil, Chile, Peru, Uruguay and other provinces in Argentina.
Codere also hopes to expand the business into the Hispanic online gambling niche in the US.
The online spin-off SPAC merger will have no impact on the wider Codere Group financial restructuring process which began in April, when the firm’s creditors took control of Codere after implementing a €225m financial rescue package.
It has been revealed that financial liquidity gained from the SPAC merger will be invested mainly in the Codere Online business, with Codere Group only receiving a maximum payment of $30m, based on certain conditions being fulfilled.
Codere’s parent ownership of Codere Online will reduce from a 15% stake to a 5% stake following the deal’s completion.
The Codere S.A business, which operates predominantly in the retail sector and has been severely affected by the Covid-19 pandemic, will be liquidated once the financial restructuring process is complete.
Codere S.A will then lose its status as a public company.