Endeavor to acquire OpenBet from Scientific Games in $1.2 billion cash and stock deal

California-based entertainment and talent-agency conglomerate Endeavor Group Holdings, Inc. is going all-in on sports wagering, having entered into an agreement to acquire sports-gambling technology company, OpenBet, from Scientific Games Corporation for $1.2 billion.

The Beverly Hills-headquartered holding company will reportedly pay for the sports betting business through a combination of $200 million in its Class A common stock and $1 billion in cash. The acquisition of OpenBet, which employs about 1,000 workers, is expected to close in Q2 2022, subject to regulatory approvals and other closing conditions.

IMG Arena:

According to Endeavor, which owns the Ultimate Fighting Championship (UFC), the purchase from the land-based and online gaming company will bolster its position in the sports betting industry. Currently, the firm’s strategy is centered on IMG Arena, which is part of the Endeavor network of integrated companies, and operates over 470 sportsbook brands in more than 30 countries around the globe. The business provides official live streaming video and data feeds for 45,000-plus sports events every year while partnering with some of the biggest sports federations in the world, with rights holder clients including the Football Association, Major League Soccer (MLS), Wimbledon, United States Tennis Association (USTA), ATP, UFC, Ryder Cup and the PGA Tour.

Market reaction:

Multiple media outlets reported on Monday night after the acquisition was announced that shares of Endeavor increased 14 percent in after-hours trading, while Scinetific Games stock swelled more than 4 percent.

In a statement regarding the acquisition, Endeavor Chief Executive Officer Ari Emanuel said…

“OpenBet marks a strategic addition to our sports betting portfolio as we look to round out our technology and product offering for sportsbook operators and sports brands worldwide.

Tremendous upside:

The CEO went on to say that the combination of OpenBet and its IMG Arena business will enable it to expand its footprint “across the entire sports betting value chain and further capitalize on the tremendous upside we see coming from this fast-growing global industry.”

London-headquartered OpenBet focuses exclusively on regulated gaming markets and licensed customers, which currently include leading sportsbooks William Hill, Ladbrokes, SkyBet, WynBet, FanDuel and DraftKings. According to the UK-based sportsbook and gaming software company, approximately 3 billion bets were processed via its betting engine in 2020. Additionally, OpenBet hosts player account and wallet solutions, trading, pricing and risk-management tools and content offerings like BetBuilder, DonBest pricing feeds, and a sports-content aggregation platform.

Transformational deal:

Also commenting on the acquisition, Jordan Levin, Chief Executive Officer for Scientific Games’ digital business unit, referred to the deal as “transformational” in combining OpenBet with “unparalleled access to sports rights, content and data across the Endeavor portfolio.”

Levin added that together, thay are “uniquely positioned to define the future of sports betting entertainment.”

Global merchant bank, The Raine Group LLC, acted as Endeavor’s exclusive advisor on the transaction, while Los Angeles-based multinational law firm, Latham & Watkins LLP, acted as legal advisor, according to Business Wire.