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Sports Entertainment Acquisition Corporation

Sports Entertainment Acquisition Corporation

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: SGHC Limited, Super Group

ENTERPRISE VALUE: $4.643 billion
ANTICIPATED SYMBOL: SGHC

Sports Entertainment Acquisition Corporation proposes to combine with SGHC Limited (“SGHC”, “Super Group” or the “Company”), a global online sports betting and gaming group.

Betway currently has more than 60 brand partnerships with many teams, leagues and sport personalities across the globe. These include some of the world’s leading sports franchises, such as the U.S. NBA teams Chicago Bulls, Golden State Warriors, Brooklyn Nets and LA Clippers; English Premier League football team West Ham United; and Ninjas in Pyjamas, the Esports team.

It is licensed in 23 jurisdictions around the world, excluding the U.S.

Targeting the fast-growing U.S. market, Super Group has entered into an agreement to acquire Digital Gaming Corporation (“DGC”), subject to obtaining customary regulatory approvals. DGC has the exclusive right to use the Betway brand in the U.S. and has secured market access for online sports betting and gaming in up to an initial 10 U.S. states including Pennsylvania, New Jersey, Colorado, Indiana and Iowa. DGC’s first bet in the U.S. was taken in March 2021.

The group ? which will be debt-free and have approximately $200 million in cash on its balance sheet at closing ? delivered $1.1 billion in net gaming revenue (NGR) and $259 million EBITDA in 2020 on a pro-forma basis and forecasts:

  • NGR of more than $1.5 billion and EBITDA of over $350 million in 2021
  • NGR of more than $1.7 billion and EBITDA of over $420 million in 2022

TRANSACTION

  • SEAH has agreed to combine with Super Group based on a $4.75 billion pre-money equity valuation.
  • Assuming no redemptions by SEAH’s shareholders:
    • (i) the transaction will deliver approximately $450 million of cash (currently held in trust) to the combined company;
    • (ii) Super Group’s existing shareholders will hold approximately 88% of the shares in the combined company on closing; and
    • (iii) the group will have approximately $200 million in cash on its balance sheet on closing.
  • Shareholders comprising more than 70% of Super Group’s equity will not be selling any shares and will roll their entire equity positions into the public company.

SEAH tran overview

EARNOUT

  • Earn-out award of up to 10% of Super Group roll over equity to be granted to Super Group shareholders upon achievement of certain performance hurdles
  • The earn-out payments will become payable at or after the Closing if the following share price trigger events occur any time during the period beginning on the date of the Business Combination Agreement and ending on the five (5) year anniversary of the Closing as follows:
    • (a) if the closing share price of one share of SEAC Class A Common Stock, or following the Closing, one NewCo Common Share, is equal to or exceeds $11.50 for 20 Trading Days in any 30 consecutive Trading Day period, a one-time issuance of a number of NewCo Common Shares equal to the product of the quotient obtained by dividing
      • (A) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by
      • (B) 0.90, multiplied by 0.025;
    • (b) if the closing share price of one share of SEAC Class A Common Stock, or following the Closing, one NewCo Common Share, is equal to or exceeds $12.50 for 20 Trading Days in any 30 consecutive Trading Day period, a one-time issuance of a number of NewCo Common Shares equal to the product of the quotient obtained by dividing
      • (A) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by
      • (B) 0.90, multiplied by 0.025; and
    • (c) if the closing share price of one share of SEAC Class A Common Stock, or following the Closing, one NewCo Common Share, is equal to or exceeds $14.00 for 20 Trading Days in any 30 consecutive Trading Day period, a one-time issuance of a number of NewCo Common Shares equal to the product of the quotient obtained by dividing
      • (A) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by
      • (B) 0.90, multiplied by 0.05.

LOCKUP

  • The Pre-Closing Holders and the Founder Holders will agree not to transfer, sell, assign or otherwise dispose of the NewCo Common Shares held by such person for 12 months following the Closing (with respect to the Founder Holders) and 6 months following the Closing (with respect to the Pre-Closing Holders)

REPURCHASE AGREEMENT

  • Prior to the Closing Date, NewCo, the Company and certain existing shareholders of the Company will enter into the Repurchase Agreements pursuant to which NewCo will repurchase NewCo Common Shares from such shareholders in exchange for cash consideration equal to $10.00 per NewCo Common Share

NOTABLE CONDITIONS TO CLOSING

  • SEAC having Minimum Cash equaling at least $300 million (where Minimum Cash means the cash in SEAC’s trust account, less amounts required for the SEAC Share Redemptions)

NOTABLE CONDITIONS TO TERMINATION

  • By the Company or SEAC if the Closing has not occurred on or before  December 31, 2021

ADVISORS

  • Oakvale Capital LLP acted as exclusive financial advisor to Super Group.
  • Goldman Sachs & Co. LLC. and PJT Partners acted as financial advisors to SEAH.
  • Cooley LLP acted as lead legal advisor to Super Group.
  • Herzog Fox & Neeman, Saiber LLC and Wiggin LLP also assisted with legal advice to Super Group.
  • Ropes and Gray acted as lead legal advisor to SEAH.
  • Blank Rome and CMS also assisted with legal advice to SEAH.

MANAGEMENT & BOARD

Executive Officers

Eric Grubman, 62
Chairman of the Board of Directors and Chief Financial Officer

Prior to this role, Mr. Grubman served as Chairman of the Board of On Location Experiences, a premium experiential hospitality business from April 2018 to January 2020. Previously, from May 2004 until July 2018, Mr. Grubman served in various roles with the National Football League (NFL), most recently as the Executive Vice President of Business Operations, where he was involved in numerous significant transactions, including the sales of NFL teams and construction of stadiums and was heavily involved with managing relationships with NFL partners. Prior to the NFL, Mr. Grubman served as Co-President at Constellation Energy Group, an energy company that provides electric power, natural gas, and energy management services, from September 1999 to April 2002. Prior to his role with Constellation, Mr. Grubman served in various roles at Goldman Sachs, including as Partner and co-head of the Energy Group. Mr. Grubman earned a bachelor’s degree in economics from the United States Naval Academy and an M.B.A. from Harvard Business School.

John Collins, 58
Chief Executive Officer

Mr. Collins served as the Chief Executive Officer of On Location Experiences from 2015 until January 2020, where he oversaw an expansion from $35 million to $650 million in annual revenues. Prior to his role at On Location Experiences, Mr. Collins served as Chief Operating Officer of the National Hockey League (NHL) from 2008 until 2015, after previously serving as Senior Executive Vice President of Business and Media from 2006 until 2008. Prior to his roles with the NHL, Mr. Collins was President and Chief Executive Officer of the Cleveland Browns NFL team from 2004 until 2006. Earlier in his career, Mr. Collins served in numerous roles at the NFL, including as Senior Vice President of Marketing, Sales and Programming. Mr. Collins earned a bachelor’s degree from the C.W. Post Campus at Long Island University.

Board of Directors

Natara Holloway, 44
Director

Ms. Holloway has served in various positions at the NFL since 2004, initially serving as a Manager in the Internal Audit department, and currently serving as the Vice President of Business Operations and Strategy for Football Operations, a position that she has held since April 2019. In this role, she oversees football technology and innovation, administration and football pipeline development. Previously, Ms. Holloway served as the NFL’s Vice President of Brand, Marketing and Retail Development and as Vice President of Corporate Development – New Business. Prior to joining the NFL, Ms. Holloway served in the Controller’s Group at Exxon Mobil from June 1998 to February 2004. Ms. Holloway earned a bachelor’s degree in Accounting from the University of Houston.

Timothy Goodell, 63
Director 

Mr. Goodell has worked at Hess Corporation, a global energy company, since January 2009, where he now serves as the Executive Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer. Mr. Goodell also serves as General Counsel and Secretary at Hess Midstream GP LLC, the general partner of Hess Midstream LP, both subsidiaries of Hess Corporation. Prior to joining Hess, Mr. Goodell spent 24 years with the New York City-based law firm White & Case, where he served as global co-head of the Mergers & Acquisitions Practice Group and a member of the Partnership Committee. From 1979 to 1981, Mr. Goodell worked at the Washington, D.C. based business consultancy, Strategic Planning Associates. Mr. Goodell earned a bachelor’s degree from Davidson College and a J.D. from the University of Virginia School of Law.

ByRoman Developer