ESE Entertainment Inc. (TSX-V:ESE), said it has entered into a binding share purchase agreement to acquire 100% of Frenzy sp. z.o.o., a European esports media and technology company, for cash and shares.
Frenzy is a media and production infrastructure company focused on the video game industry which creates and executes esports and gaming events, broadcasts, and media content. It also operates professional mobile, automated TV equipment, allowing it to produce reality shows from every part of the globe. Its main revenue streams include TV production, events and league organizations, and advertising campaigns.
“We are excited to sign this agreement with Frenzy, a leading production and technology company for the esports industry. Frenzy has contracts with some of the world’s largest gaming publishers and delivers a suite of products and services that complement ESE perfectly. By completing the anticipated transaction, ESE will strengthen its position and deliver a fully supported 360 solution for the esports and gaming industry. We believe that anticipated synergies will be clear and immediate," said Konrad Wasiela, CEO of ESE in a statement.
READ: ESE Entertainment is on track to become a world-class esports infrastructure company,
The Europe-based entertainment and technology company said the cash component of the acquisition comprises C$1,242,500 payable on closing and C$1,242,500 payable six months after the closing. The other part of the payment involves 656,606 common shares of the company issuable on closing; and up to 1,363,720 common shares to be released in four equal installments every six months, with the first installment being issuable on the last day of Frenzy’s second full fiscal quarter following closing.
The agreement will also contain an earn-out, whereby if Frenzy does not achieve certain revenue-based milestones during the earn-out period, the number of ear-out shares issuable under the agreement will be reduced proportionately. ESE has also agreed to discharge a loan owed by Frenzy in the amount of 377,329 Polish zolty (approximately C$117,914) concurrently with closing.
Frenzy is a member of the supervisory board of Cyfrowy Polsat S.A., one of the largest digital platforms in Europe and the largest in Central and Eastern Europe.
Frenzy’s key personnel have agreed to continue to run the operations of Frenzy after the transaction closes, to ensure continuous business operations and a smooth transfer of Frenzy’s business to ESE.
“We are very pleased to execute the Share Purchase Agreement with ESE and move into the acquisition closing process. The anticipated merger with ESE will be a major catalyst in our ambitious growth plans and we are already working together to execute on our business pipeline. By combining resources and expertise - we believe we can scale internationally and grow even faster than before,” said Piotr Zak, founder of Frenzy.
Closing of the transaction is subject to customary closing conditions, including TSX Venture Exchange approval.