Enthusiast Gaming Merges with J55 Capital and Aquilini GameCo

Enthusiast Gaming (TSXV:EGLX,OTCQB:EGHIF) revealed a massive merger last Friday (May 31) with J55 Capital (TSXV:FIVE) and Aquilini GameCo to develop a publicly traded esports and gaming media company in North America.

As part of a court-approved agreement, J55 will acquire all of Enthusiast Gaming’s outstanding common shares in exchange for common shares of J55. The transaction will merge Enthusiast Gaming and J55, with 4.22 J55 common shares being exchanged for each Enthusiast Gaming common share.

Following the merger, J55 Capital will then complete its acquisition of Aquilini GameCo, which acquired Luminosity Gaming just prior to last week’s announcement. As part part of this merger, Luminosity Gaming will have its esports brand leveraged through Enthusiast Gaming’s own platform.

“Our vision has always been to build the largest vertically integrated esports and gaming company in the world,” Menashe Kestenbaum, CEO of Enthusiast Gaming, said in a press release.

“The merger with Aquilini GameCo and Luminosity was a strategic decision that positions us as a dominant player in the gaming industry.”

According to the release, the companies will have C$22 million in pro forma revenue and C$36 million in cash in hand once the merger is closed. The new operation’s reach will span seven sports teams, including rights to the Vancouver Titans Overwatch team, 40 esports influencers, no less than 80 gaming websites and over 900 YouTube and Twitch channels.

Twitch is a gaming video streaming platform owned by Twitch Interactive, which is a subsidiary of Amazon (NASDAQ:AMZN).

The transaction is expected to close sometime before the end of Q3 2019 once the green light has been given by the TSX Venture Exchange as well as Enthusiast Gaming and J55 Capital shareholders. Should the deal go through, the combined companies will be named Enthusiast Gaming Holdings and will continue listing on the TSXV under the ticker symbol EGLX.

Enthusiast Gaming’s announcement came just days after it revealed its subsidiary, Enthusiast Gaming Live, has partnered with Ubisoft Canada to host the Rainbow Six Canada Nationals finals.

The Rainbow Six Canada Nationals begins in June and will finish off with live finals at the Enthusiast Gaming Live Expo at the Metro Toronto Convention Center in October. Rainbow Six Seige is a team-based first-person shooter that is part of the long-running Tom Clancy game brand.

In addition to that brand, Ubisoft is responsible for game franchises such as Assassin’s Creed, Far Cry, Just Dance and Prince of Persia.

On a one month basis, shares of Enthusiast Gaming had increased 13.42 percent to C$1.66 as of 1:56 p.m. EDT on Wednesday (June 5). Year-to-date, its shares have moved up 65.69 percent.

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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.