Codere Online announced a SPAC deal with DD3 Acquisition Corp II DDMX to become the first publicly traded online sports betting and gaming company in Latin America.
Codere Online is valued at $350 million in the SPAC merger. Current DDMX public shareholders will own 25.1% of the company after the merger.
This is the second SPAC from DD3 Capital Partners, who previously took Betterware de Mexico BWMX public in a March 2020 SPAC deal.
About Codere: Codere Online launched in 2014 as a part of the international gaming operator Codere Group, offering online sports betting and online casino through its websites and mobile applications.
The company operates in the six core markets of Spain, Italy, Mexico, Colombia, Panama and plans to start in the city of Bueno Aires in late 2021.
Online market share for Codere Online is 6% in Spain, 6% in Colombia, 3% in Panama and 11% in Mexico according to the company’s presentation.
By using an omnichannel strategy indirectly through its parent company, Codere Online has more than 10,800 venues throughout Latin America, Spain and Italy. (As of Dec. 31, because of COVID-19 temporary closings, approximately 6,600 are operating.) This relationship also gives Codere Online access to a database of more than three million registered players.
The company has sponsorships with several soccer teams including Real Madrid.
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Growth Ahead: The company highlights low market penetration in regulated regions and favorable adoption of smartphones and internet connectivity helping with the total addressable market size.
Codere Online plans on expanding to new countries as they legalize online gaming and sports betting. Countries listed in the presentation include Brazil, Chile, Peru, Puerto Rico, Uruguay and Argentina.
Going beyond Latin America, Codere also plans to pursue options to address the 60 million Hispanic population of the U.S. The company lists a total addressable market of $15.3 billion for this population.
Financials: The SPAC deal values Codere Online at 2.3x the company’s estimated 2022 revenue of $150 million.
The company lists rivals of Draftkings Inc DKNG, Wynn Resorts WYNN, Golden Nugget Online Gaming Inc GNOG and PointsBet. These rivals trade with a median of 5.1x estimated 2022 revenue.
The peer group trades at a median of 4.3x enterprise value divided by 2023 revenue compared to 1.7x for Codere Online.
Codere Online had revenue of $85 million in fiscal 2020 and is guiding for revenue of $108 million in fiscal 2021. The company sees revenue growing at a compounded annual. Growth rate of 34% from 2020 to 2023.
Revenue in fiscal 2020 was made up primarily from Spain and Mexico at 59% and 34% respectively.
Codere Online lists 2027 revenue estimate of $400 million.
Price Action: Shares of DDMX were up 0.10% to $10 on Tuesday morning.
(Image by besteonlinecasinos from Pixabay)
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