VANCOUVER, BC, Sept. 1, 2020 /CNW/ - TGS Esports Inc.
("TGS" or the "Company") (TSX-V: TGS) is pleased
to announce that it has taken the next step in its growth strategy
to provide a consolidated end to end esports experience to players
and tournament organizers by executing a letter of intent dated
August 28, 2020 (the "LOI") to
acquire Pepper Esports Inc. ("Pepper"), a leading
competitive esports platform (the "Acquisition"). In
addition, the Pepper executive team, Guy
Halford-Thompson, Jackson
Warren and Ben Hoffman, with
over a decade of combined experience in growing early stage
companies in the public markets, are expected to join TGS executive
team on the closing of the Acquisition (the "Closing").
Under the terms of the LOI, TGS is expected to acquire all of the
outstanding securities of Pepper by way of a three-cornered
amalgamation.
The Pepper platform offers an advanced suite of tools for league
operators, tournament operators, and venue owners to setup and
manage esports communities and run world class events. These
include key innovations, such as Pepper's automatic game scoring
technology, which uses its patent pending AI engine and saves event
organizers hundreds of hours of setup time, while also providing
players and attendees with a vastly improved experience.
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.
"Rather than sending our players to third party platforms for
online events, and missing out on key revenue, we will now be able
to keep players within our ecosystem while also generating revenue
directly from the Pepper platform," said Spiro Khouri, CEO of TGS. "This acquisition
brings an important technology platform to TGS, making our business
model scalable, global, and with defensible IP."
"This acquisition will fast track our ability to scale the
Pepper platform by leveraging the existing customers and expertise
of the TGS team, and we hope to bring accelerated revenue growth to
TGS once the Pepper platform is fully launched," said Guy Halford-Thompson, CEO of Pepper. "Becoming
part of TGS is a big milestone for the company."
The global market for esports tournaments is expected to be
USD $1.598 billion by 2023 according to an August 2020 report by Statista, with few dominant
game-agnostic service providers that are publicly traded.
Summary of Acquisition
The LOI sets out the principal terms on which the parties have
agreed to complete the Acquisition. The parties have agreed to
negotiate in good faith to formalize a definitive agreement (the
"Definitive Agreement") on or before October 30, 2020, and they have agreed to a
mutual exclusivity and due diligence period expiring 45 days from
the date of the LOI.
On Closing, the Company will acquire all of the issued and
outstanding common shares of Pepper (the "Pepper
Shares") in consideration for 43,385,664 common shares of the
Company (each a "TGS Share", and such TGS Shares issued as
consideration for the Acquisition, the "Consideration
Shares") 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 the Closing and a further 20% being
released every six months thereafter.
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.
On Closing, Pepper will have the right to appoint a nominee to
the board of directors of the Company.
The LOI contains, and the Definitive Agreement will provide for,
customary representations, warranties and covenants including
non-solicitation and a right to match any superior proposal.
Completion of the Acquisition remains subject to a number of
conditions, including: (i) the approval of the Acquisition by the
shareholders of Pepper, (ii) the completion of satisfactory due
diligence, (iii) the approval of the boards of directors of the
Company and Pepper, (iv) the execution of the Definitive Agreement,
(v) obtaining all required consents, waivers and approvals,
including the approval of the TSX Venture Exchange, and (vi) other
closing conditions customary for transactions of this nature.
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.
About Pepper Esports Inc.
Pepper is a leading esports platform provider that offers an
advanced platform to create and manage communities of players,
organizers, spectators and sponsors, all in one place. By
working closely with event organizers and live venue operators over
the last two years, Pepper has developed a suite of advanced tools
to manage esports communities, run world class esports and operate
physical gaming venues.
Pepper's key technologies include its patent pending AI engine,
which automatically captures game data to create a tournament
experience that extends beyond live gameplay and includes highly
demanded features such as global leaderboards, player profiles and
statistics, new tournament discovery and digital wallets.
About TGS Esports Inc.
TGS Esports Inc. is the parent company of Myesports. Myesports
was created in Vancouver, British
Columbia, in 2018, and is an esports organization focused on
providing and hosting esports events, tournaments, and leagues at
both the amateur and professional levels both online and in
person. Myesports is the operator of Canada's first dedicated esports arena, The
Gaming Stadium, located in Richmond,
British Columbia, which opened in June 2019. Since its
inception, Myesports has hosted esports events for games such as
League of Legends and Fortnite, as well as organized and hosted the
Pinnacle event at the River Rock Casino and the Burnaby Festival of
Learning. Myesports also hosts regular online tournaments as well
as provides high quality broadcast production for any event. For
more information, visit www.thegamingstadium.com.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
On behalf of the Board of Directors
"Spiro Khouri"
Spiro Khouri, CEO
TGS Esports Inc.
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking
statements, which reflect the expectations of management regarding
the Company. Forward-looking statements consist of statements that
are not purely historical, including any statements regarding
beliefs, plans, expectations or intentions regarding the future,
including with respect to: Guy
Halford-Thompson, Jackson
Warren and Ben Hoffman
joining the TGS team, that the Acquisition will allow the Company
to keep players within its ecosystem while also generating revenue
directly from the Pepper platform, that the Acquisition will make
the Company's business model scalable, global, and with defensible
IP, that the Acquisition will fast track Pepper's ability to scale
the Pepper platform by leveraging the existing customers and
expertise of the TGS team the execution of the Definitive Agreement
and the terms of such Definitive Agreement, the completion of the
Acquisition, the acceptance of the TSX Venture Exchange, the global
market for esports tournaments and that a finder's fee may be
payable in connection with the Acquisition. Such statements are
subject to risks and uncertainties that may cause actual results,
performance or developments to differ materially from those
contained in the statements, including risks related to factors
beyond the control of the Company. The risks include the following:
the unknown magnitude and duration of the effects of the COVID-19
pandemic and other risks that are customary to transactions of this
nature. No assurance can be given that any of the events
anticipated by the forward-looking statements will occur or, if
they do occur, what benefits the Company will obtain from
them.
This press release is not an offer of the securities for sale
in the United States. The
securities have not been registered under the U.S. Securities Act
of 1933, as amended, and may not be offered or sold in the United States absent registration or an
exemption from registration. This press release shall not
constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of the
securities in any state in which such offer, solicitation or sale
would be unlawful.
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SOURCE TGS Esports Inc
