Sports tech and data analytics company Catapult Sports (ASX: CAT) is set to substantially expand its technology suite with the $45 million acquisition of SBG Sports Software, a tech business originally founded in collaboration with Mercedes F1.
With Formula 1 being one of the world’s most lucrative sports that has long been reliant on engineering data, SBG was founded in 2008 to capture large quantities of live data and video. This data would then be engineered to generate data visualisations that extract critical information for decision making and on-field success.
Mercedes has since won the past 7 Constructor’s Titles in Formula 1, led by 7-time Championship driver Lewis Hamilton.
Advancing the technology beyond motorsports where SBG achieved outstanding success, the tech is now also utilised in rugby and soccer where some of their most high-profile clients include: Manchester City, Manchester United, Tottenham Hotspur, Everton and Paris St Germain. In total, 16 of the 20 teams in English Premier League are SBG clients.
“From our early discussions it was clear that SBG and Catapult shared a common vision for the future of sports technology and the significant impact data will have in helping customers optimize performance: It was even clearer that combining our technologies, product solutions, and talent would have immediate and long-lasting positive impact on our customers,” said Catapult CEO, Will Lopes.
“We are confident the acquisition of SBG will significantly contribute to Catapult’s growth and continued focus in developing the most sophisticated sports technology platform.”
Consideration for the acquisition will comprise $20m million in cash, $20 million in deferred CAT shares at an issue price of $2.15 per share and up to $5 million in additional CAT shares subject to performance. Any issued shares will be subject to 12 months escrow from the date of issue.
With the addition of SBG Sports and their global client portfolio, Catapult expects the accretive earnings to deliver EBITDA margins around 28% in FY21 and Annualized Contract Revenue growth of 28%.
To fund the acquisition, Catapult has announced a $35m underwritten Placement for institutional investors at an Offer Price of $1.90 per share. It will be followed by a $5m Share Purchase Plan at the same Offer Price.
“I couldn’t be more excited about the future potential of Catapult. Our recent results have shown our ability to accelerate growth post-pandemic,” added Lopes.
“ We have scaled our management team to capture and lead the advancement that is occurring in sports technology. And with the acquisition of SBG, we are accelerating our roadmap significantly, while adding a team to the Catapult family that shares the same level of ambition and customer obsession.”
The global market for sports analytics and wearables is expected to reach USD $16.6 billion in 2026 at 26.4% CAGR from 2021 to 2026
Canaccord and Evans & Partners are acting as Joint Lead Managers and Underwriters to the Placement.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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