Genius Sports Group to go public in $1.5bn SPAC deal
Sports data heavyweight targets global expansion in merger with dMY Technology Group II
Genius Sports Group is primed to become a public company via a $1.5bn (£1.1bn) merger with US-based technology investment firm dMY Technology Group II.
The merger will take place in the form of a special purpose acquisition company (SPAC), in which shareholders of both firms sacrifice shares in exchange for shares in the new company.
The transaction values the combined business at approximately $1.5bn, or eight times Genius Sports’ projected 2021 revenue of $190m.
The consideration payable to Genius Sports existing shareholders will consist of a combination of cash and rollover equity in the new company. It is understood the two businesses have been in discussions over a deal for the best part of three months.
In addition to the $276m held in trust by dMY II, a group of “institutional and experienced industry investors” will participate in the deal through a common stock PIPE (private investment in public equity) transaction of approximately $330m, valued at $10 per share.
Proceeds of the PIPE transaction will be used to repay shareholder loans and share redemptions. The names of these investors have not been disclosed.
Shares in the combined company will trade on the New York Stock Exchange. It is understood London-based gambling merger specialists Oakvale Capital advised Genius Sports on the deal.
The boards of both companies have already unanimously approved the transaction, although the deal will require the approval of dMY II’s shareholders and is subject to certain closing conditions.
Completion is expected in the first quarter of 2021. The combined group is then expected to have approximately $150m in growth capital with no debts.
The combined group will target accelerated US growth as well as international expansion through organic growth and future M&A activity in “emerging tech companies and “highly synergistic businesses.”
Genius Sports estimates its group revenue in FY2020 will be $145m. That will increase 64% to $238m by 2022, group estimates show.
Genius Sports CEO Mark Locke will retain the same role within the combined group with dMY II chairman Harry You and chief executive Niccolo de Masi joining the new board of directors.
“This transaction will help us continue to expand and strengthen our position as a nexus of the global sports, betting and media ecosystem,” Locke said.
DMY Technology Group previously merged with US gambling giant Rush Street Interactive in July to form a combined firm worth more than $1.7bn, again via a SPAC.
DMY CEO de Masi said of the deal: “Elemental data provider Genius Sports Group benefits from the growth of all participants in the global sports betting market. Mark Locke has pioneered the provision of official rights and live data which have been instrumental in building the modern sports betting market.
“The company has a strong track record of growth and we are very excited by the opportunities for further expansion in this rapidly growing segment,” he added.
Going public through a SPAC arrangement is proving popular in the cash-rich US market, with DraftKings and Golden Nugget also choosing this method to finance multi-billion-dollar deals.
DMY Technology was listed on the New York Stock Exchange in February, generating gross proceeds of $230m