Posted on: June 8, 2021, 10:40h.
Last updated on: June 8, 2021, 11:17h.
Sportradar and special purpose acquisition company (SPAC) Horizon Acquisition Corp. II (NYSE: HZON) are reportedly ending merger talks. The sports betting data provider is opting to pursue a conventional initial public offering (IPO).
Talks between the Swiss company and the SPAC founded by Todd Boehly started in early March and were rumored to value the target at $10 billion to $12 billion. At the time, it would have marked one of the biggest transactions between a gaming company and a blank-check entity.
The lower multiple was ultimately the settled-on figure. But it still required Horizon to raise additional funding, and when the market for private investment in public equity (PIPE) soured — an often-used source of capital in SPAC mergers — the Sportradar/Horizon marriage proposal came under pressure.
Earlier today, Sportico broke the news of the parties walking away from the transaction. Citing an unidentified source familiar with the matter, the outlet reports Sportradar will pursue a traditional IPO.
What’s Next for Sportradar
To their credit, Horizon and Sportradar worked to bring the deal across the finish line. Last month, the parties extended the negotiating window, stoking speculation that an official announcement wasn’t far off.
Obviously, that scenario never arrived, and while it’s not immediately clear why the proposal fell apart, it could be a combination of Horizon not being able to procure adequate funding and the blank-check market coming under stress in recent months. While there are still indications the idea of a SPAC/gaming marriages is on solid ground, some companies in other industries that went public via blank-check mergers are being taken to task by analysts and investors.
As for Sportradar’s next moves, the traditional IPO route makes sense, particularly with the market souring on SPACs for the time being. The company’s investors include three NBA owners — Mark Cuban of the Dallas Mavericks, Michael Jordan of the Charlotte Hornets, and Ted Leonsis of the Washington Wizards.
Easy Comp for Sportradar
For its part, Sportradar wasn’t wed to the SPAC idea, as the company had long been rumored to be considering a standard IPO as well.
Whether it can command the aforementioned $10 billion valuation remains to be seen. Its most direct rival, Genius Sports (NYSE:GENI), which recently came public after a blank-check merger, currently has a market capitalization of $3.45 billion. Earlier this year, Genius snagged a six-year data accord with the NFL that is worth an estimated $1 billion — a deal some market observers believe could weigh on the multiple for Sportradar.
Additionally, bankers working on a Sportradar IPO may be apprehensive about assigning a lofty valuation to the name. Some newly public companies have sold off because they’ve come to market with exorbitant market values. Crypto exchange operator Coinbase (NASDAQ:COIN) is one recent example of that trend.