The BetMakers Technology Group Ltd (ASX: BET) share price is crashing lower on Friday after the release of an update on its acquisition plans.
In morning trade, the betting technology company's shares are down over 15% to 60 cents.
What happened?
Earlier this week BetMakers launched and subsequently received firm commitments for a $50 million equity raising to fund the acquisition of the Tote and Digital Business assets of leading international online sports betting company Sportech for $56.2 million.
This acquisition is intended to accelerate BetMakers' international growth plans and significantly expand its global customer base and strategic position to fully capitalise on emerging opportunities in the U.S. market.
To say it would be a game-changer for the company, would be an understatement.
Management revealed that on a pro-forma basis for FY 2020, the Tote and Digital Business combined with BetMakers' existing operations would have delivered $56.1 million revenue and $7.7 million EBITDA.
This compares to the stand-alone revenue of $9.2 million and EBITDA of $0.8 million BetMakers recorded in FY 2020.
What was today's update?
Unfortunately for the company, Sportech has announced that is has received a conditional proposal from Standard General to acquire it.
This is the second time that Standard General has made an offer. Its initial approach on 5 November was rejected. However, a 14% increase in its offer this week means the Sportech board has granted it due diligence.
In light of this, there is now a great deal of uncertainty over BetMakers' acquisition of its Tote and Digital Business.
And while it does have a binding agreement in place with Sportech, this remains subject to a shareholder vote. If more value is seen in a full takeover, shareholders could vote down this proposal.
Though, it is worth noting that the board of Sportech has agreed to recommend the acquisition to its shareholders. It has also confirmed that it will shortly release a circular convening the meeting to approve the acquisition of the Tote and Digital Business.
