eSports

Enthusiast Gaming to Acquire Omnia Media for Roughly $34M, Secures $11.25M Financing

Toronto Stock Exchange (TSX) listed Canadian esports and media company Enthusiast Gaming Holdings has entered into a binding agreement to acquire Omnia Media for roughly $45.5M CAD ($34.1M USD). The transaction is expected to be closed in Q3 2020.

Enthusiast Gaming Holdings owns Overwatch League franchise Vancouver Titans, Call of Duty League team Seattle Surge, and esports organization Luminosity Gaming.

The company also announced that it has entered into an agreement for a $15M CAD ($11.25M) financing with a syndicate of underwriters led by Canaccord Genuity Corp. The transaction is a “bought deal,” meaning the underwriters committed to the financing and will buy 10M common shares of Enthusiast Gaming at a per-share price of $1.50 CAD ($1.125). Additionally, the underwriters were granted an option to purchase up to an additional 1.5M shares on the same terms, representing additional gross proceeds of $2.25M CAD ($1.69M) if the option is exercised in full.

Prior to the completion of the acquisition, Omnia will dispose of undisclosed assets unrelated to its core-gaming business. Upon completion of the acquisition agreement, Enthusiast Gaming will acquire 100% of the issued and outstanding shares of Omnia Media Inc. from its current parent company Blue Ant Media Solutions.

Blue Ant will be compensated in three asset types. The company will receive a cash payment of $11M CAD ($8.25M), a vendor-take-back note worth $5.75M CAD ($4.31M), which will bear a 9% annual interest rate and carry a maturity of 36 months, and 18.25M common shares of Enthusiast Gaming worth $28.7M CAD ($21.53M) at the time of writing. Blue Ant is expected to own approximately 18% of Enthusiast Gaming once the acquisition and bought deal financing are completed.

Blue Ant will be entitled to nominate a director to the board of directors of Enthusiast Gaming while it holds a certain amount of the company’s shares. The company’s ability to resell Enthusiast Gaming shares is restricted for one year.

Los Angeles-based media company Omnia Media is a global gaming platform that creates, manages, and operates a multi-channel YouTube network. Omnia Media produces and programs more than 30 weekly shows across advertising-based video-on-demand and over-the-top channels, in addition to representing more than 500 gaming influencers across YouTube and Twitch, including Michael “shroud” Grzesiek and Imane “Pokimane” Anys.

For its fiscal year ending Aug. 31, 2019, Omnia generated net revenues of $59.9M, up 28.8% from $46.5M in the same period of the previous year. Enthusiast Gaming generated total revenues of approximately $12M CAD ($9M) in 2019 while netting a loss of $78.5M CAD ($58.9M), although listing expenses for going public, transaction costs, and costs associated with several mergers and acquisitions accounted for $56.2M CAD ($42.1M) of the company’s costs while total operating expenses were $25.4M CAD ($19.1M).

According to Enthusiast Gaming, the combined company is expected to immediately generate positive earnings before interest, taxes, depreciation, and amortization (EBITDA). The company is also looking to reduce costs by $500K CAD ($375K) to $1M CAD($750K) by using synergies between Omnia Media’s and Enthusiast Gaming’s business processes.

Enthusiast Gaming anticipates profiting from several synergies upon acquiring Omnia Media. The company will own more viewers, be able to create more content, sell more ads and subscriptions, develop new revenue streams, and improve its analytics for advertising. Upon completion of the acquisition, Enthusiast Gaming’s platform will reach 300M gamers, generating more than 4.2B views monthly.

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