TORONTO, ON--(Marketwired - December 13, 2016) - Gaming Nation Inc. (TSX VENTURE: FAN) ("Gaming Nation" or the "Company") is pleased to announce that it has entered into a definitive agreement (the "Agreement") (through its subsidiary Gaming Nation Acquisition Corp), to acquire BD Sport Group Ltd. ("BD Sport"), the market leader for stadium betting services in the United Kingdom. The acquisition will provide Gaming Nation with a portfolio that includes 100% of the shares of BD Sport Ltd., BD Stadia Ltd. and BD Deportes SL. The transaction is expected to close in March 2017 and is subject to general closing conditions and regulatory approvals in the United Kingdom and Canada.

The purchase price consists of a total cash payment of £8,800,000 with additional earn out provisions potentially increasing the total purchase price to £11,000,000. BD Sport generated approximately £4,300,000 in revenue over the last 12 month reporting period and earnings before interest, taxes and depreciation ("EBITDA") of £1,300,000 in the same period. The purchase price represents an EBITDA multiple of 6.8 x LTM EBITDA (excluding any performance based earn out payments).

The Company will pay 50% of the purchase price (£4,400,000) upon closing, 31.25% (£2,750,000) 12 months following the closing and 18.75% (£1,650,000) will be payable 24 months following the closing. In addition, there are two potential earn out payments (cash or common shares of Gaming Nation) of up to £2,200,000 (£1,100,000 each) if BD Sport achieves EBITDA targets for the twelve months ending December 31, 2017 of £1,300,000 and £1,400,000 for the twelve months ending December 31, 2018.

"Gaming Nation and its Board of Directors firmly believe the acquisition of BD Sport will prove to be extremely accretive for our shareholders based on a multiple of factors including the attractive EBITDA to free cash-flow of BD Sport's businesses, the ability to work with the existing infrastructure of BD Sport in deploying Gaming Nation's 5050 Central business within the European market as well as the substantial growth opportunities into new stadiums that BD Sport can realize when combined with 5050 Central's electronic raffle system," stated Scott Secord President/CEO Gaming Nation.

About BD Sport

BD Sport was founded in 2007 to provide stadium betting services for sports teams and brands primarily in the UK football market. BD Sport Group operates stadium betting at 31 stadiums in the UK employing 9 full-time employees and over 1,000 match day staff. BD Sport processes more than 3 million bets per season from football and rugby fans via its company BD Stadia Ltd., utilizing its own bespoke and hardware solutions developed over the last 10 years. BD Stadia Ltd. was formed in order to satisfy the demand for a better quality of service from betting providers in football stadiums. Their match day betting service is currently operational with clubs across the Premier League and Champions League including Manchester United, Manchester City, Liverpool, Arsenal, Chelsea, Tottenham Hostpur, Everton, Norwich City, Newcastle United and Sunderland.

BD Sport also provides sports marketing services for many gambling brands and rights holders in the UK and across Europe to generate new revenue streams by linking betting to sports. Their main activities include brokering, activation, live streaming and stadium betting.

Key Transaction Highlights

  • BD Sport generated approximately £4,300,000 in revenue over the last 12 month reporting period and EBITDA of £1,300,000 in the same period.
  • BD Sport currently represents Gaming Nation's 5050 Central business in the UK and the Company expects the acquisition will further expedite the roll-out of 5050 Central's business throughout Europe.
  • Management expects the acquisition to be accretive to earnings per share and provide meaningful free cash-flow.
  • Management believes BD Sport's business will achieve an EBITDA to free cash-flow conversion rate of over 95% based on historical results.
  • The initial cash payment of the purchase price will be funded with cash on the balance sheet of the Company.
  • Future cash payments in accordance with the payment schedule will be substantially funded with cash flow from operations of BD Sport and Gaming Nation subsidiaries.
  • Licenses currently held by BD Sport in the UK and other countries will expedite the growth process for 5050 Central as well as open doors to new revenues streams.
  • Key management of BD Sport have been retained by Gaming Nation and have signed long-term employment agreements.

"BD Sport is excited about the growth opportunities that exist between Gaming Nation and our core business," said Tony Warwick and John Lee, Directors and Co-Founders of BD Sports. "We firmly believe that merging our business with Gaming Nation will provide the infrastructure and financial support to grow BD Sports business throughout Europe while providing immediate commercialization of Gaming Nation's 5050 Central business."

Immediate Growth Opportunities & Business Synergies

  • BD Sport's current business model allows for profitable operations in venues in which fan attendance averages 20,000 or greater. Adding 5050 Central's raffle platform to its current operations will allow BD Sport to operate in more than 200 new venues throughout Europe with average attendance of 5,000 or more fans.
  • BD Sport's current infrastructure of game day staff, servicing its stadium betting clients, will integrate the electronic 50/50 raffle system into its existing operations requiring no significant additional staffing for operations.
  • In the event that sports wagering is legalized in certain jurisdictions in the United States the combined companies would be extremely well positioned to capitalize on this opportunity.
  • New technology developments, generating new revenues streams, will be deployed with greater acceleration in the market through the combined clients bases of both companies.

Forward-Looking Statements

This press release contains forward looking information within the meaning of Canadian securities laws concerning the business, operations and financial performance of the Company and BD Sport's businesses. Forward looking information includes but is not limited to statements with respect to revenues, EBITDA, free-cash-flow, earn out payments and accretive earnings. This forward looking information is based on certain assumptions regarding expected growth, results of operations, performance and business prospects and opportunities. While the Company considers these assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward-looking information is subject to a number or risks, uncertainties and other factors that could cause actual results to differ materially from what the Company currently expects. These risks, uncertainties and other factors include, but are not limited to market, currency, operational liquidity, changes in economic conditions, interest rates or tax rates, the fact that gaming is a heavily regulated industry and that such regulation is subject to change, competition from other providers, the possibility that the Company will be unable to successfully integrate any proposed assets to be acquired, the risks associated with international and foreign operations and the risks. Although the Company believes its expectations are based upon reasonable assumptions and has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended.

The foregoing factors are not intended to represent a complete list of the factors that could affect the Company and the Transaction. The Company does not intend or undertake to publically update any forward-looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws. Any forward-looking statements or facts (including financial information) related to BD Sport's businesses discussed or disclosed herein are derived from information obtained from BD Sport and has not been independently verified by the Company.

Reconciliation of Non-IFRS Measures

In this press release, the Company uses the terms "EBITDA", "EBITDA margin", "EBITDA to free-cash-flow conversion rate", "accretive" and "free-cash-flow". These terms do not have a standardized meaning in accordance with International Financial Reporting Standards ("IFRS") and, are therefore, unlikely to be comparable to similar measures presented by other companies. Rather, these measures are used to provide management and investors with additional measures of performance.

About Gaming Nation Inc.:

Gaming Nation Inc. (TSX VENTURE: FAN) provides technology and information platforms to the sports and entertainment industry. The company's platforms include 5050 Central, an electronic real-time raffle system, and sports information websites Fantasy Guru, FantasyGuruElite and Pick Nation. The head office of Gaming Nation is located at 400 - 50 Minthorn Blvd., Thornhill ON L3T 7X8.

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Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information:

Scott Secord
President and CEO

For investor inquiries, please contact
Joann Head