Connect with us

M&A

GameSquare Acquires FaZe Clan: A Strategic Move in the Esports Arena

GameSquare Holdings Inc. announced its decision to acquire the renowned esports company, FaZe Clan. This acquisition comes as a strategic move to rejuvenate FaZe Clan, which has witnessed a substantial decline in its market value over the past year.

Published

on

A Year of Decline for FaZe Clan

For context, FaZe Clan gained popularity by publishing videos playing Call of Duty and making prank videos on social media. The company quickly grew, and little by little, they incorporated more content creators on various topics. The popularity of games like Fortnite gave FaZe Clan an important boost, with which they obtained sponsorships from companies such as McDonald’s, Disney, General Mills, Ghost, and Xfinity, among many others, in addition to the million-dollar profits obtained from the sale of merchandise, which led them to generate up to USD 70 million last year.

FaZe Clan, once a titan in the esports world with a market capitalization of USD 1 billion during its 2021 public debut, has faced a tumultuous year. The company’s stock, which traded above USD 20 per share in August 2022, saw a sharp decline, settling at a mere 18 cents by Thursday’s close. However, the acquisition news provided a slight boost, pushing the stock to 20 cents per share on Friday.

Despite the merchandise sales, the challenges for FaZe Clan were not limited to its stock price. The company reported losses exceeding USD 168 million last year, marking a period of financial instability.

The Promise of Synergy and Growth

Despite the challenges, both companies are optimistic about the future. They believe that their merger will lead to significant synergies, with GameSquare, backed by Dallas Cowboys owner Jerry Jones, projecting over USD 18 million in run-rate cost savings post-acquisition. These savings are expected to arise from reduced duplicate corporate expenses and other cost-cutting measures.

The vision for the combined entity is grand. The merger aims to establish a comprehensive platform encompassing media and agency organizations, esports teams, creative services, and advanced technology capabilities. GameSquare CEO, Justin Kenna, emphasized the strategic nature of the acquisition, stating,

“The acquisition of one of the biggest names in gaming serves as a perfect illustration of how we have built a powerful infrastructure with expansive scale that we can use to leverage the full spectrum of resources within the GameSquare ecosystem.”

In an interview, Jerry Jones said that he viewed this as an opportunity to reconnect with the FaZe founders and expected a combined audience of 1 billion viewers:

Advertisement

Leadership Transition and Future Plans

Post-acquisition, Richard Bengtson will assume the role of CEO of FaZe Clan, succeeding interim CEO Christoph Pachler. Bengtson expressed his confidence in understanding the brand’s essence, having grown up in the digital age. He acknowledged GameSquare’s partnership, emphasizing their shared vision for FaZe Clan’s future.

The leadership’s primary focus will be on revitalizing the FaZe Clan brand, reestablishing connections with its core fan base, and supporting individual FaZe Clan creators and their communities.

Deal Specifics

As per the agreement terms, each share of FaZe Clan common stock will be converted into 0.13091 shares of GameSquare’s common stock. Post-acquisition, GameSquare shareholders will hold approximately 55% of the combined entity, with FaZe Clan shareholders owning the remaining 45%.

The companies have also outlined provisions for terminating the agreement under specific conditions, including if the deal remains unconsummated by December 31.

Representing Parties in the Deal

Advertisement
  • Legal Adviser to GameSquare Holdings Inc.: BakerHostetler
  • Legal Adviser to FaZe Holdings Inc.: Sullivan & Triggs LLP
  • Financial Adviser to GameSquare: Oak Hills Securities Inc.
  • Fairness Opinion to FaZe Clan’s Board: Current Capital Securities LLC

The acquisition marks a pivotal moment in the esports industry, with two giants coming together with the promise of synergy, growth, and a renewed focus on community engagement. Only time will tell how this merger shapes the future of esports, but for now, it’s a move that has captured the industry’s attention.

Photo courtesy of FaZe Clan

Authors

  • Leonid Shmatenko

    Founder of Esports Legal News, Leonid Shmatenko, stands at the forefront of legal innovation in the esports domain, crafting pathways through its unique regulatory and technological landscapes. With a rich tapestry of experience in esports and blockchain, Leonid provides astute legal guidance to esports associations, clubs, and entities, ensuring they navigate through regulatory, data protection, and technology law with finesse and foresight. Leonidโ€™s expertise is not merely recognized within the confines of his practice but is also celebrated in the legal community. Who’s Who Legal extols him as “an innovative thinker and an expert in CIS and esports disputes,” further describing him as an “outstanding arbitration practitioner with diverse experience and a broad network.” These accolades underscore his adept ability to navigate complex disputes and regulatory challenges, particularly in the vibrant and fast-evolving esports industry. At Esports Legal News, Leonid is not merely a founder but a pioneering force, ensuring that the esports industry is navigated with strategic legal insight, safeguarding its interests, and propelling it into a future where legal frameworks are not just adhered to but are also instrumental in shaping its evolution and growth. View all posts

  • GameSquare Acquires FaZe Clan: A Strategic Move in the Esports Arena

    Gilberto is a Mexican law student at Universidad Panamericana in Mexico City, one of the top law schools in the country, with an unwavering passion for various legal subjects like international law and arbitration. He is part of the full immersion program, designed to provide students with a deep understanding of international law. This experience aims to delve into the complexities of global legal systems, international relations, and dispute resolution mechanisms. In addition to this, Gilberto participated in the youth parliament organized by the Mexican Senate, representing the voice of the Mexican youth, as well as having various international academic experiences in Canada, United Kingdom and France. He is a passionate gamer and looking forward to contribute to ELN. View all posts