Codere spins online unit to DD3 SPAC in pursuit of $350m Nasdaq listing

Nasdaq-listed SPAC DD3 Acquisition Corp has entered a definitive agreement to merge with ‘Codere Online’ – the online gambling subsidiary of embattled Spanish gambling group Codere SA. 

Under DD3 ownership, Codere Online plans to gain a listing on the Nasdaq Exchange, as dealmakers target a $350 million (€290m) valuation for the online gambling unit, which will be separated from Codere’s business group. 

DD3 is led by former Goldman Sachs executive Martin Werner, who listed the SPAC last month and secured $77 million in cash combined with a $125 million trust guaranteed by the investors of Baron Funds, MG Capital and LarrainVial Chile.

The SPAC’s capital will be utilised primarily to fund ‘marketing expenditures, technology platform improvements and expansion into new high-growth markets’ – with dealmakers citing the active opportunities of Colombia, Mexico and further soon to be regulated Latin American marketplaces. 

Codere Online will continue to be led by its unit Managing Director Moshe Edree, who commented: “By going public and with the new capitalization, we will be in a superb position to leverage our online business in our core countries of Spain, Italy, Mexico, Colombia and Panama, as well as the City of Buenos Aires, where we expect to start operating in late 2021, to fuel our further expansion in other high-growth Latin American markets.”

In its transaction statement, DD3 underlined that it had acquired the only established multi-market sportsbook brand in Latin America, where Codere has been active since 1984.

DD3 aims to transform Codere Online’s business to take advantage of ‘demographic changes favouring online gambling’ across South America, where a “very low existing market penetration with increasing adoption of smartphones, e-commerce and internet connectivity positions the region for tremendous near, medium and long term growth.

“We are excited to partner with Moshe and his team to bring Codere Online to the public markets,” added Werner. “The omni-channel presence of Codere paired with the expansive addressable market and limited competition from global gaming operators gives Codere Online a unique advantage in their expansion across Latin America.”

The SPAC deal follows a turbulent period for the larger Codere group, which last month was placed under the control of its US creditors as the firm’s existing shareholders agreed to a new ‘liquidation agreement’ to ease the burden of the firm’s liabilities totalling +€700 million.

An embattled Codere agreed to a further group-wide restructuring, in order to secure a €225 million cash injection combined with Codere creditors converting €350 million of long-term debt into corporate equity.

DD3 and Codere governance will present a combination agreement to the SEC alongside a new company prospectus to existing investors – in which merger and Nasdaq listing plans to be finalised by the end of Q4 2021 trading.

“We are proud of this deal, which will provide our online team with the financial resources needed to grow Codere Online and take it to a new, higher level,” said Vicente Di Loreto, CEO of Codere Group.

“It is a good signal of the value we have been able to create in the last three years, and the solid team and business platform achieved through Moshe’s leadership.”

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