8-K: Golden Matrix Completes Acquisition of MeridianBet Group, Expanding Global Reach

Sentiment:

Merger Announcement 9 April 2024 8:00 AM

📋All filings for Golden Matrix Group, INC

Golden Matrix Group has finalized its acquisition of the MeridianBet Group, creating a larger global gaming enterprise.

Capital raiseThe document mentions that the deferred cash consideration of $18 million is payable upon the earlier of (i) the date that the Parent (or one of its Subsidiaries) has raised funding sufficient following the Closing, on terms deemed acceptable in the reasonable good faith discretion of the independent members of the Board of Directors of the Parent, to allow for the payment of the Deferred Cash Consideration, and following such payment, that the Purchaser (and its Subsidiaries on a consolidated basis) will not be left insolvent or with inadequate cash to pay its debts, bills, and other liabilities as they become due, in the ordinary course of business; and (ii) April 26, 2024.The document also states that the Purchaser shall take commercially reasonable best efforts to promptly raise funding sufficient to pay the entire amount of the Deferred Cash Consideration by the Deferred Cash Consideration Due Date.

Summary

Golden Matrix Group has completed the acquisition of MeridianBet Group, effective April 1, 2024.
The acquisition was finalized on April 9, 2024, and includes a combination of cash, debt, and stock.
The deal involves a $12 million cash payment at closing, $18 million deferred cash payment due by April 26, 2024, and $15 million in promissory notes.
Golden Matrix issued 82,141,857 shares of common stock and 1,000 shares of Series C Preferred Stock to the sellers.
The combined entity will operate in 17 countries across four continents.
The acquisition is expected to significantly increase Golden Matrix's revenues and profitability.
The effective date of the acquisition is April 1, 2024, for corporate, tax, accounting, and legal purposes.
The deferred cash consideration of $18 million will accrue interest at 3% per annum if not paid by April 26, 2024.
Meridian Serbia will be owned by Golden Matrix's Serbian subsidiary, Golden Matrix Group doo.
The sellers are required to transfer their ownership of Meridian Gaming Ltd. (Kenya) within 12 months of closing.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the successful completion of a major acquisition, which is expected to drive growth and profitability. However, there are some risks and challenges mentioned, which temper the overall optimism.

Positives

The acquisition is expected to significantly increase Golden Matrix's revenues and profitability.
The combined company will have a broader global footprint, operating in 17 countries.
The company has secured a management agreement with Zoran Milosevic to ensure the continued operation of the MeridianBet business.
The company has successfully closed the acquisition, which was a key strategic goal.
The company has secured a new independent director and Chairman of the Board, William Scott, who has significant experience in the gaming industry.

Negatives

The company has taken on $15 million in debt through promissory notes.
The company has a deferred cash payment of $18 million due by April 26, 2024, which could strain finances if not paid on time.
The sellers now have majority voting control of the company, which could lead to conflicts of interest.
The company has had to waive certain timing obligations in connection with the delivery of closing schedules.
The company has changed its fiscal year end, which may cause some disruption in financial reporting.

Risks

The company may face challenges in integrating the operations of Golden Matrix and MeridianBet.
The company may not be able to raise sufficient funding to pay the deferred cash consideration by April 26, 2024.
The company may face challenges in managing the operations of the combined entity across multiple international markets.
The company may face risks associated with the gaming industry, including fraud, user cheating, and cyber-attacks.
The company may face risks associated with systems failures and failures of technology and infrastructure.
The company may face risks associated with foreign exchange and currency fluctuations.
The company may face risks associated with the ongoing conflict in Ukraine/Russia and the conflict in Israel.

Future Outlook

The consolidated businesses are expected to deliver significant increases in both revenues and profitability, and the company believes it is now well-positioned to continue its growth trajectory and deliver incremental value to all its stakeholders.

Management Comments

This is a momentous occasion, and one that we believe will result in a fundamental, as well as a transformational, change for our rapidly growing company, said Golden Matrix Chief Executive Officer, Brian Goodman.
The consolidated businesses are expected to deliver significant increases in both revenues and profitability; and we believe we are now well-positioned to continue our growth trajectory and deliver incremental value to all our stakeholders.

Industry Context

The acquisition of MeridianBet Group aligns with the trend of consolidation in the online gaming industry, as companies seek to expand their global reach and market share. This move positions Golden Matrix to compete more effectively with larger players in the market.

Comparison to Industry Standards

The acquisition of MeridianBet Group by Golden Matrix is a significant move in the online gaming industry, comparable to other mergers and acquisitions aimed at expanding market presence and revenue streams.
For example, the acquisition of William Hill by Caesars Entertainment in 2021 demonstrates a similar strategy of combining online and land-based operations to create a larger, more diversified gaming company.
The deal structure, involving a mix of cash, debt, and stock, is also common in the industry, allowing companies to manage their cash flow while still providing value to the sellers.
The deferred cash payment and promissory notes are similar to other deals where the acquirer needs time to integrate the acquired business and generate the necessary cash flow.
The appointment of William Scott, an experienced gaming executive, as Chairman of the Board is a common practice to bring in industry expertise and ensure smooth integration and growth.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Director	Philip Daniel Moyes	William Scott	April 9, 2024	Resignation of Philip Daniel Moyes as a required condition to the closing of the acquisition and appointment of William Scott pursuant to the rights of the holders of the Series C Voting Preferred Stock.
Chairman of the Board	NA	William Scott	April 9, 2024	Appointment of William Scott as Chairman of the Board.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Amendment to Articles of Incorporation	Removed provisions for a three-class, classified Board of Directors, opted out of Nevada Control Share Act, and increased authorized shares of common stock from 250,000,000 to 300,000,000.	April 4, 2024	Streamlines board structure and increases flexibility in capital raising.
Adoption of Series C Preferred Stock	Designated 1,000 shares of Series C Voting Preferred Stock with specific voting rights and director appointment rights.	April 4, 2024	Gives the sellers significant voting power and board representation.
Amendment to Bylaws	Fixed the number of members of the Board of Directors at five and clarified that shareholders have the ability to amend the bylaws.	April 5, 2024	Provides more clarity on board structure and shareholder rights.
Change in Fiscal Year	Changed the company's fiscal year end from October 31st to December 31st.	April 5, 2024	Aligns the company's fiscal year end with that of the Meridian Companies.

Stakeholder Impact

Shareholders will see a change in voting control and potential for increased value due to the acquisition.
Employees of both Golden Matrix and MeridianBet will be impacted by the integration of the two companies.
Customers of both companies will have access to a broader range of gaming products and services.
Suppliers and creditors of both companies will be impacted by the changes in the combined entity.
The company has entered into a management agreement with Zoran Milosevic to ensure the continued operation of the MeridianBet business.

Next Steps

Golden Matrix will integrate the operations of MeridianBet Group.
Golden Matrix will work to raise the necessary funding to pay the deferred cash consideration by April 26, 2024.
Golden Matrix will continue to operate its existing B2B and B2C gaming platforms.
Golden Matrix will work to transfer the ownership of Meridian Gaming Ltd. (Kenya) within 12 months.
Golden Matrix will file the financial statements of the Meridian Companies and pro forma financial information within 71 calendar days.

Key Dates

Date	Description
June 27, 2023	Date of the Amended and Restated Sale and Purchase Agreement of Share Capital.
September 22, 2023	Date of the First Amendment to the Amended and Restated Sale and Purchase Agreement of Share Capital.
January 22, 2024	Date of the Second Amendment to the Amended and Restated Sale and Purchase Agreement of Share Capital.
March 19, 2024	Date of the special meeting of stockholders where the acquisition was approved.
April 1, 2024	Effective date of the acquisition for corporate, tax, accounting, and legal purposes.
April 4, 2024	Date of filing the Certificate of Amendment to Articles of Incorporation and Certificate of Designation of Series C Preferred Stock.
April 5, 2024	Date of the amendment to the Bylaws and change in fiscal year end.
April 8, 2024	Date of the Third Amendment to the Amended and Restated Sale and Purchase Agreement of Share Capital.
April 9, 2024	Date of the closing of the acquisition and the execution of the Nominating and Voting Agreement and Day-to-Day Management Agreement.
April 26, 2024	Date by which the deferred cash consideration of $18 million is due.

Keywords

acquisition, gaming, MeridianBet, Golden Matrix, online gaming, sports betting, international, B2B, B2C, promissory notes, share issuance, voting control

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