Publicly-traded Norwegian esports organisation Heroic Group announced it has received a cash offer from Krow Bidco AS to acquire all outstanding shares in the company.
Krow Bidco AS has offered to buy the shares at NOK 2.0 (~£0.15) per share, which Heroic’s Board of Directors has unanimously recommended that shareholders accept.
Based on a NOK 2.0 share price, the deal would currently see all of Heroic Group’s shares sold for NOK 55.9m (~£4.2m; $5.26m).
The share acquisition deal will go ahead if Krow Bidco enters into share purchase agreements to acquire 75% of all outstanding shares in the company.
Shareholders holding roughly 42% of all shares — including members of Heroic’s Board and executive management — have already signed conditional share purchase agreements with the company.
Krow Bidco AS is Norwegian private limited liability company which is “ultimately fully owned by a regulated EU investment fund”, according to a company release. Heroic said in the announcement that Krow Bidco’s pool of investors would help ensure ongoing operational funding, growth, expansion and success of the company.
Additionally, as part of the deal, Heroic has entered into a loan agreement with Krow Bidco for NOK 6.5m (~£0.49m), set to be disbursed if the 75% threshold is met. The loan would improve Heroic’s liquidity and its ability to meet its running expenses while the deal goes through. The loan is unsecured and has a 12% interest rate.
A Heroic representative had no comment when contacted by Esports Insider.
The news comes as Heroic Group has faced a difficult financial situation in which it has desperately tried to raise money to stay afloat. In March, after an extraordinary general meeting, Heroic managed to secure a NOK 10m (~£750,000) investment primarily from existing shareholders in order to allow it to continue operations.
However, the esports organisation said it needed to raise at least NOK 80m (~£6.2m) through 2025, with NOK 10m needed before the summer of 2023.
The company has been publicly listed on the Norwegian OTC (N-OTC) Market since February 2021. Its share price started at NOK 18 and has since dropped to NOK 0.5 at the time of writing.
The terms and conditions of the share acquisition offer will be sent to shareholders soon, Heroic announced, after which a 14 day offer period will commence. The offer is expected to complete in June 2023 should it go through.
According to a report by HLTV, the deal was facilitated by esports management firm ULTI Agency.
A representative for Krow Bidco AS commented in a release: “Our vision for HEROIC is to increase revenue, expand into new markets, and improve customer engagement. We wish to highlight the significant growth potential of the esports online gaming industry and how our company is well-positioned to take advantage of it.
“Our team has the strength and experience to lead the company towards success. We plan to proceed with key hires or additions to the team that have been made in preparation for the acquisition. We plan to continue innovating and improving the company’s products and services, secure sponsorship deals, or onboard new players. On the financial aspect we shall include revenue projections, cost-cutting initiatives, and plans for reinvesting profits into the company.”
Heroic said in its announcement that prior to its deal with Krow Bidco, the Board had evaluated several other options and ‘screened the market’ for other opportunities.
Joachim Haraldsen, CEO of Heroic, commented: “With Krow Bidco, Heroic is offered an opportunity to continue its mission that’s been sought with support of all stakeholders. At the same time, the transaction provides a value for the shareholders in a challenging financial position for the company. Following the efforts made during recent time, the offer represents an attractive opportunity for our shareholders”.