Affiliate XLMedia has agreed a deal to sell its European and Canadian sports betting and gaming assets to Gambling.com Group (GAMB).

The deal is worth up to $42.5 million and the company says that it intends to use the proceeds of the transaction to cover a number of costs related to its North American business, including covering asset transition costs and settling outstanding tax provisions..

Assets subject to the transaction include Freebets.com, WhichBingo.co.uk, Nettikasinot.com and Vedonlyonti.com, together with smaller Europe and Canada sites.

“The Board believes the sale of these assets, which is approximately two times the current market capitalization of the whole company, is an excellent outcome for XLMedia and its shareholders.  Importantly, this transaction will allow the Company to clear legacy liabilities, provide working capital and return cash to shareholders,” commented XLMedia chair Marcus Rich.

The deal has a fixed consideration of $37.5 million in addition to an earnout consideration of up to a further $5 million. XLMedia will receive payment from GAMB in three installments, starting on April 1 and then subsequently six months after and one year after closing.

In its latest financial report GAMB predicts that the acquisition of XLMedia’s assets will produce revenue of approximately $10 million and incremental Adjusted EBITDA of approximately $5.0 million during the last nine months of 2024.

“This [latest] acquisition will provide us with another big brand and assets that complement our existing website portfolio in a number of our key-focus markets, enabling us to drive further growth which is both high margin and highly accretive,” said GAMB Chief Executive Officer and Co-Founder Charles Gillespie. “By operating these assets on our technology platform, we expect to unlock their full potential. We are confident that this latest acquisition will create incremental shareholder value in the same way we have done with previous acquisitions.”

XLMedia launched in North America in 2020 with the aim of evolving into a North American sports-led business, however, it has struggled in the region in recent years. During 2023 the company’s revenue fall below its full-year expectations and it cited the reduced level of customer acquisition throughout the year from operators as a reason for the poor performance.

According to the company, the transaction will allow it to focus on delivering value for shareholders from its North American business which it believes remains well positioned to drive revenue in U.S. regulated states and new states when they legalize sports betting.

It is not the only affiliate operator to exit Europe to focus on its North American operation. Catena Media offloaded its European and Australian assets in 2023 in order to concentrate on its growth in North America amid a number of organizational changes.