PlayUp reverse takeover and platform acquisition collapse

24 January 2019

Australia’s PlayUp has decided to cancel a planned deal to acquire US gaming platform 123gaming, and scrapped a reverse takeover that would have seen it listed in the Australian Securities Exchange (ASX).

The sports betting, gaming and fantasy sports operator had planned to complete a reverse takeover of renewable energy company Mission New Energy with the deal designed to fast track a public listing for PlayUp.

However the deal was then scrapped after PlayUp discovered that Mission New Energy, which traded on the ASX under the MBT symbol, is suspended from trading on the ASX for failing to pay its annual listing fees. It also found that the business was not capable of trading on the US NASDAQ Stock Market while carrying out due diligence.

These, PlayUp said, were just two of a number of misrepresentations made by Mission New Energy that were uncovered during due dilligence.

"During our due diligence into MBT we identified several areas of concern that were not adequately addressed, and that were quite disparate to what MBT had represented to us,” PlayUp chief executive Daniel Simic explained. “Ultimately, they failed to deliver on what they had initially represented.

"We requested meetings with their executive team to table and discuss these concerns which were not responded to,” Simic added. “It left PlayUp with no alternative but to terminate.”

PlayUp also noted that Mission New Energy failed to provide accurate or reliable figures concerning the position of its creditors or subsidiaries. These could significantly impact the post-takeover company’s ability to trade, the operator noted, with queries about these issues raised during due diligence apparently ignored.

Despite PlayUp cancelling the transaction, Mission New Energy claims that the operator owes it money, namely AUD$43,000 (£23,400/€27,000/US$30,500) in pre-trigger holding costs. However PlayUp claims that this money would only have been paid if the reverse takeover had been finalised.

In related news, PlayUp, which operates the ClassicBet, Draftstars, Betting.Club, TopBetta, and MadBookie brands, has also pulled out of its proposed acquisition of US-facing blockchain iGaming platform 123gaming. The operator said that it had concerns about the ownership of intellectual property, the platform’s commercial viability, its supplier agreements, payment gateways and profitability.

"We'd like to thank 123gaming for its honesty and openness in its dealing with us,” Simic said. “Unfortunately, the deal could not be completed having regard to the best interests of the key stakeholders in PlayUp.

“PlayUp submitted alternative proposals to 123gaming which included offering PlayUp stock options to 123gaming shareholders, however 123gaming declined. We wish them all the best in their business endeavours moving forward.”

123gaming chief executive Rob Earle said that while he was disappointed by the deal’s collapse, he still believed in the concept, and would look for other opportunities to deploy its solution in the US gaming market.

PlayUp had planned to integrate the 123gaming platform as part of its drive to create a blockchain-powered online betting, gaming and fantasy sports offering.

However the company is moving ahead with its acquisition of TopBetta and MadBookie from odds solutions provider The Bookmakers. It paid a further $750,000 towards the $6m acquisition cost on January 17, with a further $1m to be paid on January 29.