PMKR shareholders should take the deal, Echelon says

The acquisition of Playmaker Capital (Playmaker Capital Stock Quote, Chart, News, Analysts, Financials TSXV:PMKR) is a good deal for shareholders, says Echelon analyst Rob Goff.

On November 6, Playmaker announced that it had entered into an agreement to be acquired by Copenhagen-based Better Collective for approximately 176-million euros. The deal was unanimously approved by the company’s board.

“Over the past 12 months, I have been talking a lot about a transformational deal for Playmaker and its shareholders that will take this company to the next level,” Playmaker CEO Jordan Gnat said. “Today’s announcement does exactly that, and I could not be more excited for the Playmaker family to join the Better Collective family. Their success is undeniable, and their vision to become the leading digital sports media group aligns with us exactly. The cultures of our companies are very similar, and I see the integration and synergies to be incredibly accretive to shareholders.”

Goff says the fit is right.

“Management has consistently spoken to their openness towards a transformational acquisition and to the advantages of scale,” Goff wrote. “While these comments typically lead to a view of Playmaker as an ongoing acquirer, the transaction and alignment with Better Collective represent a compelling manifestation of management’s oft-stated goals. Better Collective’s enterprise value (EV) of $1.7B with cash of $83M brings financial resources to
support accelerated growth while its pre-acquisition revenue forecasts for 2023/24 of $352M/$413M with associated EBITDA of $122M/$150M reflect a strong, global sports betting media platform.”

In a research update to clients November 7, Goff moved his rating on the stock from “Speculative Buy” to “Tender”. The analyst noted that Playmaker was inlcuded in Echelon’s Top Pick portfolio for 2023.

“The transaction values Playmaker shares at roughly 13.8x LTM EV/EBITDA (when considering the Company’s more conservative EBITDA calculation which doesn’t exclude head office operating expenses), while against our 2023/2024 EBITDA forecasts the acquisition multiples reflect 14.8x/12.9x. These multiples reflect a modest premium with Better Collective’s shares pre-acquisition trading at 13.6x/11.1x 2023/2024 EBITDA. We would expect revenue and cost synergies to support accretive proforma valuation considerations for Better Collective from the acquisition looking to 2024 and beyond,” the analyst added.