Why A Danish Affiliate Paid $240 Million For The Action Network

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The Action Network

Sports betting M&A is not just for operators.

Danish affiliate Better Collective (BC) announced Monday it acquired The Action Network (TAN) for $240 million.

The fee will be paid in cash and stock, with BC issuing $12 million in new stock to Action management and key employees.

The deal is expected to close in Q2 2021.

Bidding war for The Action Network

It was no secret that TAN was up for sale, with DraftKings and FanDuel also reported as bidders. That competition might help explain the lofty price tag, equivalent to 16x 2020 revenues of $15 million.

BC said Action revenues would “approach” $40 million this year.

The company has 3.6 million monthly average users but is not yet profitable, per the Wall Street Journal.

How did The Action Network get here?

The brand was founded back in 2017, backed by the Chernin Group. It makes 70% of its money from affiliate fees, with the remainder from subscriptions.

It also owns its app technology, which includes a popular bet-tracking tool.

Action will continue to operate as a separate business unit, with CEO Patrick Keane reporting to Better Collective US CEO Marc Pedersen.

Keane said the acquisition was a “great achievement” for TAN.

He added: “In just a few years, our team has managed to build a leading sports betting product and media business in the US market, making us attractive to a leading international player.”

Big US plans for Better Collective

For Better Collective, the acquisition expands its US-facing affiliate network.

BC said its US revenues were on track to surpass $100 million by 2022 following the deal.

BC chief executive Jesper Søgaard said the company was well-positioned to profit from the ongoing expansion of US sports betting.

“We add three new, very well positioned US sports media brands to our portfolio and welcome around 100 new colleagues, together representing an invaluable pool of knowledge and expertise on the US sports betting media market,” Søgaard said. 

“By all accounts, this is a great day for Better Collective.” 

The company’s share price climbed 14% on Tuesday morning following the announcement.

Still early in US sports betting

The $240 million tag is a little more than double what DraftKings paid for VSiN last month.

The price and the bidding war show there is still plenty of appetite among operators and affiliates for media M&A.

DraftKings, for one, is likely still on the lookout for another media acquisition.

Editor’s note: Legal Sports Report is owned by Catena Media, a competitor of Better Collective.