While the company has already announced its intent to acquire the platform, new, critical information has come out about the deal, including compounding revenue streams, technological advancements, and management synergies.
Read on for the top 3 new developments in this deal!
Company Leadership Synergies
Pepper Esports Inc. has been an online-focused platform since its inception, developing technology to efficiently manage, develop, and improve esports-focused communities. CEO of Pepper Esports, Guy Halford-Thompson, will be joining TGS as President and Director of the company, lending knowledge of capital markets and technology-first gaming.
The agreement will also include the appointment of Jackson Warren as Chief Product Officer. Warren has worked together with Halford-Thompson since 2016, during which they have had five successful exits and three successful acquisitions. They have raised $35M in funding and delivered $500M in investor returns during this period. He is the current Chief Product Officer for Pepper Esports and will help consolidate institutional knowledge and experience at TGS Esports, going forward.
Dallas (Benjamin) Hoffman has been appointed as Chief Technology Officer at TGS Esports, expanding his current role and facilitating technical knowledge implementation at TGS. Hoffman has been involved in previous companies alongside Halford-Thompson and Warren, with proven success.
Altogether, these leadership additions represent a definitive shift for TGS, as the company continues building out its online capabilities and growing its foothold in the digital arena.
Compounding Revenue Streams
TGS Esports underwent a massive business transformation at the onset of the pandemic, earlier this year. Initially, TGS (previously known as The Gaming Stadium), founded Canada’s first brick-and-mortar esports tournament center, capitalizing on the development of gaming as a mainstream entertainment option. When capacity restrictions were put in place, TGS quickly shifted to an online-first business model and continues to develop this aspect of the business.
As per TGS’s latest acquisition, revenue streams such as data monetization, payment processing, and subscription revenue are being expanded and continually developed. As TGS’s central online platform, Pepper Esports Inc. offers back-end development support and institutional knowledge in these specific areas, creating improved experiences for platform users and thus, increasing overall online effectiveness.
Technological Developments & Improvements
Pepper Esports has been working closely with online event organizers over the past two years to develop a suite of advanced tools to manage esports communities and run world-class events. Pepper’s key technologies include its patent-pending AI engine, which automatically captures game data to improve the tournament experience through various means.
The acquisition also represents the transferred ownership of other online functionalities such as global leaderboards, player profiles and statistics, new tournament discovery, and digital wallets. This consolidation of features represents continued progress toward a fully digital gaming ecosystem for TGS Esports audience members.
“Working closely with the TGS team, we are already seeing accelerated interest in the Pepper platform. Being able to offer a full suite of services from integrated streaming to full event management sets us apart from other platforms.” said Guy Halford-Thompson, CEO of Pepper. “Now the definitive agreement is in place we can start to execute our plans to scale and grow our platform.”
Read the Full Press Release Below
TGS ESPORTS ANNOUNCES SIGNING OF DEFINITIVE AGREEMENT TO ACQUIRE LEADING COMPETITIVE ESPORTS PLATFORM, PEPPER ESPORTS
Further to its news release of Sept. 1, 2020, TGS Esports Inc. has entered into an amalgamation agreement with Pepper Esports Inc., a next-generation competitive e-sports platform, and 1271801 B.C. Ltd. (Subco), a wholly owned subsidiary of the company, pursuant to which the company will acquire all of the issued and outstanding shares of Pepper by way of a three-cornered amalgamation. As part of the Acquisition, the Pepper executive team, Guy Halford-Thompson, Jackson Warren and Ben Hoffman, who have a decade of combined experience in growing early-stage companies in the public markets, will join the TGS executive team.
The Pepper platform offers an advanced suite of tools for league operators, tournament operators, and venue owners to effortlessly set up and manage esports communities and run world-class events. These include key innovations, such as automatic game scoring technology, that uses Pepper’s patent pending AI engine and saves event organizers hundreds of hours of setup time, live leaderboards which vastly improve player and spectator experiences, a universal ranking system that ranks players across all competitive games, and more.
Transaction Highlights
Develop New Revenue Streams – the Acquisition is expected to provide TGS with diverse new online revenue streams that include data monetization, payment processing and recurring subscription revenue.
Expanded Consumer and Business Base – the combined company will have the ability to acquire users from all over the globe through tournaments of any kind.
Highly Accomplished and Experienced Team – the completion of the Acquisition will add a team with over a decade of combined experience in growing early-stage companies in the public markets.
Technology Platform – The Acquisition adds a technology platform to TGS, which is scalable, global, and with defensible IP.
“The online gaming market has exploded in 2020, with recent stats showing an estimated 2.7 billion gamers across the globe (https://www.statista.com/statistics/293304/number-video-gamers/). The combination of TGS’ event expertise and Pepper’s leading platform allows us to reach all gamers, regardless of location.” said Spiro Khouri, CEO of TGS. “With this acquisition, we are in a unique position to offer an all encompassing esports experience to any tournament organizer, gamer, or company looking to market to this growing demographic.”
“Working closely with the TGS team, we are already seeing accelerated interest in the Pepper platform. Being able to offer a full suite of services from integrated streaming to full event management sets us apart from other platforms.” said Guy Halford-Thompson, CEO of Pepper. “Now the definitive agreement is in place we can start to execute our plans to scale and grow our platform.”
Summary of Acquisition
Pursuant to the Amalgamation Agreement, on closing of the Acquisition (“Closing”), the Company will issue to each holder (each, a “Pepper Shareholder”) of common shares of Pepper (each a “Pepper Share”) three (3) common shares of TGS (each a “TGS Share”, and such TGS Shares issued as consideration for the Acquisition, the “Consideration Shares”) for each one (1) Pepper Share (the “Exchange Ratio”) held by such Pepper Shareholder at a deemed price of $0.14 per Consideration Share for aggregate deemed consideration of approximately $6,073,993. The Consideration Shares will be subject to a contractual lock-up, with 20% of the Consideration Shares being released on Closing and a further 20% being released every six months thereafter. The Consideration Shares may be subject to an additional escrow period as required by the TSX Venture Exchange (the “TSXV”).
Each outstanding security of Pepper that is convertible or exchangeable for Pepper Shares will be exchanged for corresponding securities that are convertible or exchangeable for TGS Shares on substantially the same economic conditions.
The Acquisition is subject certain conditions including: (i) the receipt of all necessary approvals from the respective shareholders and boards of directors of each of Pepper, the Company and Subco, (ii) the approval of the TSXV) (iii) Pepper shall not have received notices of dissent to the Acquisition from Shareholders holdings more than 5% of the issued and outstanding Pepper Shares, (iv) the employment agreements of Guy Halford-Thompson, Dallas Benjamin Hoffman and Jackson Warren shall have been assumed by the Company (v) there having been no material adverse effect occurring with respect to Pepper or the Company; (vi) Pepper shall have received the consent from the holders of options or warrants to purchase Pepper Shares to the exchange of such securities for equivalent securities to purchase TGS Shares, and (vii) other closing conditions customary for transactions of this nature.
The Acquisition is not a Non Arm’s Length Party transaction. A finder’s fee is expected to be payable in connection with the Acquisition, subject to the approval of the TSXV, and further details will be provided once available.
Directors and Officers
On Closing, it is expected that Guy Halford-Thompson will be appointed as President and a director of the Company, and Dallas Benjamin Hoffman and Jackson Warren will be appointed as Chief Technology Officer and Chief Product Officer, respectively.
Guy and Jackson have worked together since 2016, during which they have had five successful exits, three via acquisition (QuickBitcoin, Bitcoiniacs and Xapcash) and two via public listings (TSXV:BTL, TSXV:DASH). Guy is also a founder and board member of Eli Technologies and Minehub, both of which are due to list in late 2020. Over the last 4 years, Guy and Jackson have raised over $35m in funding and delivered $500m in investor returns. BTL was founded by Guy, Jackson and Guy’s brother in 2015 and was joined by Ben in early 2017. It delivered early investors significant returns by the time Guy and Jackson exited the company in 2018. Guy, Jackson and Ben have a strong track record of delivering investor value, and believe they have discovered a truly unique and rare opportunity with Pepper.
Haywood Securities Inc. has acted as a financial advisor to Pepper in connection with the Acquisition. The Company and Pepper deal at arm’s length with each other, and the Acquisition is not expected to result in a change of control of the Company. A finder’s fee in an amount to be determined at a later time may be payable in connection with the Acquisition, subject to compliance with applicable securities laws and the approval of the TSXV.
Disclaimer: TGS Esports is a communications client of Edge Investments. We have also purchased stock on the open market.