The blank-check company that was trying to merge with PlayUp and take the online sportsbook operator public says the deal is now off, dealing another hit to the Australian bookmaker.
PlayUp and IG Acquisition Corp. (IGAC) announced last September that they had entered into a business combination agreement and accompanying plan that would lead to PlayUp listing its shares on the NASDAQ stock exchange.
The proposed transaction valued PlayUp, an Australia-based operator of online sports betting sites, at $350 million. It was expected to close in the first quarter of 2023, pending all closing conditions being met.
However, IGAC, a publicly-traded acquisition company (or SPAC), announced in December that the deal was amended, removing its exclusivity provisions and allowing the parties to investigate other possibilities.
Wherefore art thou financial statements?
The reason for this, IGAC said, was due to delays in obtaining audited financial statements and other materials from PlayUp, "as well as market conditions that have made it difficult to obtain financing necessary to consummate the transactions."
Another transaction never materialized, apparently, and neither did the financial statements. And, on January 6, IGAC said it was scrapping the deal entirely, citing the missing information, and added that it would dissolve itself on Wednesday and redeem shares at a price of around $10.12.
“Despite SPAC’s repeated requests for [PlayUp’s] Financial Statements, the Company has failed to deliver the Company Financial Statements and has provided no indication of when the Company Financial Statements will be delivered or if they will be delivered at all,” the notice of termination says.
The termination of PlayUp’s SPAC deal underscores the tough economic and financial conditions faced by the legal sports betting industry. Volatile stock markets, higher interest rates, and increased inflation have pressured companies and their customers, who may find their household finances squeezed.
A serious situation
But the failed transaction comes as PlayUp has had some troubles lately. PlayUp said last July that its board of directors was eyeing "strategic alternatives" for the business, including a sale of the company, partnerships, or other transactions. The bookmaker is engaged in legal action with its former U.S. CEO as well, which is in connection with a failed deal with now-bankrupt crypto company FTX.
The company is also facing scrutiny from at least one U.S. sports betting regulator. The Ohio Casino Control Commission recently accused PlayUp of illegal gambling activity in connection with its now-shuttered "slots+" product.
While PlayUp has the right to a hearing and due process, the allegations and delay in its Ohio licensing are putting a damper on its growth in the U.S. PlayUp does have licenses in Colorado and New Jersey.
“PlayUp has taken the OCCC request with utmost seriousness,” a spokesperson said recently in an emailed statement. “We are committed to full compliance with all Ohio laws and have suspended the product indefinitely.”
