FaZe Clan’s ungraceful fall from an aspiring billion-dollar company to a struggling penny stock facing a potential delisting from the Nasdaq is set to be halted. Pending shareholder and regulatory approvals, esports holding company GameSquare Holdings will acquire FaZe Clan. The planned acquisition of FaZe Clan was approved unanimously by the board of directors of both companies and is anticipated to be finalized in the fourth quarter of 2023.
GameSquare Holdings – also a Nasdaq-traded company, which is backed by Dallas Cowboys owner Jerry Jones – owns several esports assets, including the Texas-based esports organization Complexity Gaming, UK-based esports talent agency Code Red Esports, gaming and esports media company GCN, and gaming and lifestyle marketing agency Cut+Sew (Zoned). Since its 2020 public listing, GameSquare has been on a strategic path, acquiring firms centered around esports, gaming, and youth culture, making FaZe Clan a logical addition to its portfolio.
Central to GameSquare’s revitalization plan for FaZe Clan is the reinstatement of the brand’s founding members to rekindle its original essence. FaZe Clan will function as an independent division within GameSquare, spearheaded by its co-founders – Richard “FaZe Banks” Bengtson as CEO, Thomas “FaZe Temperrr” Oliveira as President, and Yousef “FaZe Apex” Abdelfattah as Chief Operating Officer.
Supporting this acquisition, GameSquare has secured a $10M commitment from Goff & Jones Lending Co, LLC for share purchases. Additionally, as per the acquisition terms, GameSquare is required to secure an asset-based loan facility from SLR Digital Finance LLC allowing access to an additional $10M. Post-acquisition, GameSquare management expects to cut combined operating costs by $18M and plans to share detailed financial guidance post-transaction.
Upon closing the all-stock transaction, existing GameSquare shareholders will hold about a 55% stake in the merged entity, while current FaZe Clan shareholders will own approximately 45%. With the closing of the acquisition, each outstanding share of FaZe Clan will be converted into the right to receive 0.13091 shares of GameSquare’s common stock.
The announcement significantly impacted the stock prices of both companies, with FaZe Clan’s and GameSquare’s shares temporarily climbing by over 40% and 20%, respectively, in the early trading hours on Friday. The all-share nature of the deal implies no direct new valuation for FaZe Clan rather than being consummated at a specific market valuation, encompassing significant volatility.
The acquisition, however, holds contingencies. It could be terminated under certain circumstances like the deal not closing by Dec. 31, 2023, failure in obtaining shareholder approval from either side, or if other closing conditions remain unmet.