Golden Matrix acquires majority stake in CFAC online discount platform

Golden Matrix Group (GMGI) is expanding into prize draws through the acquisition of a majority stake in Australian online discount platform Classics for a Cause (CFAC).

GMGI will acquire an indirect 80 per cent controlling interest in the entity which owns CFAC for $8.4 million, of which 70 per cent will be paid in cash and the remaining 30 per cent in restricted shares of GMGI common stock.

The agreement includes provisions for a holdback amount and an earnout component, contingent upon CFAC meeting certain post-closing profit targets. Additionally, GMGI will inherit a call option to acquire the remaining 20 per cent minority interest.

CFAC operates a platform that offers paid members access to a wide range of discounts from retailers across Australia. Members are rewarded with free entries into promotional giveaways which feature luxury, high-end American and Australian classic cars, caravans and campers, as well as cash and vacation giveaways.

Currently, two classic cars are given away per month, with plans to increase this to four per month while expanding into prize homes and cash prizes later this year.

GMGI said the acquisition would complement its existing gaming and sports betting operations and solidify its position as a leading tournament operator.

“We are thrilled to proceed with this acquisition as it aligns perfectly with our strategy of acquiring profitable and accretive businesses,” said Golden Matrix CEO Brian Goodman. “Our previous acquisition of RKings Competitions has been a phenomenal success, significantly contributing to our revenues and profits, and we anticipate similar results with CFAC.

“CFAC will provide a strong foundation to build on, as was the case with RKings, and we expect this acquisition will not only enhance our revenue and cash flow but will also add to our bottom-line profitability. We are confident in our ability to scale CFAC, implement cost efficiencies, upgrade its technology and further strengthen its free cash flow.”

Founded in 2019 to address the funding needs of under-resourced veteran programs, CFAC generated over $10 million in revenue and more than $1.9 million in operating profit before tax for the 12-month fiscal year ending 30 June 2024.

CFAC has a customer base of more than 300,000, with over 10,000 active monthly subscribers. Recurring monthly subscribers contribute over 30 per cent of revenue.

“We are incredibly excited to join forces with GMGI and contribute to their ongoing success,” said CFAC founder Thomas Bailey. “This partnership offers a significant opportunity to expand CFAC into new markets and elevate the company to new heights.”

Bailey will continue in an executive role with CFAC, where he will oversee the company's growth and lead the roadmap for its planned expansion into the United States.

Shares in Golden Matrix Group Inc (NASDAQ:GMGI) closed at $2.48 per share in New York Wednesday.