A significantly lower price
Endeavor Group Holdings Inc. is buying the sports betting business OpenBet in a deal worth $800m. The Ultimate Fighting Championship (UFC) owner had originally planned in September 2021 to buy OpenBet for $1.2bn from Light & Wonder.
The original $1.2bn was to be in the form of $1bn cash plus newly issued shares. The value of the previous deal was based on the average share price during a certain period in September 2021, but stock prices have dropped significantly across the board since then.
$750m cash and about $50m worth of shares
The new $800m purchase price will be comprised of $750m cash and about $50m worth of shares. Endeavor did not provide any exact reasons or comment on the lower purchase price, however, media stocks have been hit particularly hard by falling market conditions.
Expanding its presence in the sports betting space
Endeavor shares closed at $20.56 on Thursday, down from highs of more than $35 toward the end of 2021. The idea behind buying OpenBet is to allow Endeavor to get more of a foothold in the sports betting space. It already has a presence in the sector through IMG Arena, which delivers live streaming data and video feeds for many thousands of sports events each year to sportsbooks across the world.
The original plan had been for the OpenBet deal to close in the second quarter of 2022, but the filing on Thursday stated that the transaction will likely not be completed until the fall. Light & Wonder is set to get $700m in after-tax proceeds from the sale.
Light & Wonder realigning its business
Light & Wonder, previously known as Scientific Games, has had a diverse presence in the gambling space for a number of years. It recently decided to rebrand and restructure its existing business.
In addition to agreeing to let go of its OpenBet division, Light & Wonder also sold its lottery division to Brookfield Business Partners in a deal worth $6.05bn. These transactions will help the company lessen its debt burden. Between the two deals, OpenBet will receive about $5.6bn in net after-tax proceeds. Light & Wonder’s debt burden is now $4bn, a major drop from its previous $8.8bn figure.
