Golden Matrix pays $8.4m for 80% stake in rewards firm Classics for a Cause
US firm continues expansion into diversified operations after buying 80% stake of Australian cashback, discounts and rewards business
Golden Matrix Group has continued its recent M&A push by purchasing a controlling interest in Classics for a Cause for $8.4m (£6.5m), subject to customary closing conditions.
Following on from the completion of the MeridianBet Group deal in April, the US company has now entered the loyalty and rewards industry for the first time.
The deal for MeridianBet followed up the 80% purchase of RKings Competitions for $10.6m in December 2021.
Golden Matrix will acquire 80% of the Australian independent online discount platform at a price representing a multiple of roughly 5x pre-tax profit for the fiscal year ending 30 June 2024.
Of $8.4m total, 70% will be paid in cash and the remaining 30% will be settled through restricted shares of Golden Matrix Group stock.
There will also be a hold-out amount and an earn-out which will be dependent on Classics for a Cause meeting specific post-closing profit targets. In addition, Golden Matrix will have a call option on the remaining 20% of the company.
Classics for a Cause founder Thomas Bailey will remain in an executive role at the firm, where he will oversee its planned expansion into the US.
Bailey founded Classics for a Cause in 2019 to support veteran charity programmes, with the business having expanded to offer “paid members access to a wide range of discounts from retailers across Australia”.
The company also “rewards its members with free entries into promotional giveaways”, including luxury, high-end American and Australian classic cars, cash and vacations.
For the 12-month fiscal year ending 30 June 2024, the online discount firm generated over A$10m (£5.2m) in revenue and $1.9m in operating profit before tax.
The company has a customer base of more than 300,000, with over 10,000 active monthly subscribers. According to Golden Matrix, recurring monthly subscribers contribute to more than 30% of total revenue.
Brian Goodman, Golden Matrix CEO, said: “We are thrilled to proceed with this acquisition as it aligns perfectly with our strategy of acquiring profitable and accretive businesses.
“Our previous acquisition of R Kings Competitions has been a phenomenal success, significantly contributing to our revenues and profits, and we anticipate similar results with CFAC [Classics for a Cause].
“CFAC will provide a strong foundation to build on, as was the case with R Kings, and we expect this acquisition will not only enhance our revenue and cash flow but will also add to our bottom-line profitability.
“We are confident in our ability to scale CFAC, implement cost efficiencies, upgrade its technology and further strengthen its free cash flow.”
Classics for a Cause founder Bailey added: “We are incredibly excited to join forces with GMGI [Golden Matrix Group Inc] and contribute to their ongoing success.
“This partnership offers a significant opportunity to expand CFAC into new markets and elevate the company to new heights.”
Golden Matrix Group’s share price stood at $2.49, up 0.4% at the time of writing on the morning of 21 August, 2024.