Some say it was a cheap deal.
(Reuters) - Faze Holdings, the esports company that was once valued at $1 billion, is being bought by peer GameSquare in an all-stock deal after mounting losses slammed its share price.
The companies did not disclose the financial details of the deal in a joint announcement on Friday, but Bloomberg News reported that it was worth around about $17 million.
The move caps a tumultuous ride for Faze that went public in 2022 through a blank-check merger only to lose most of its valuation over the course of more than a year. The company had a market value of just $14 million, as of last close.
It was initially valued at $1 billion in the SPAC deal, but the figure was later reduced to $725 million.
GameSquare, which is backed by Dallas Cowboys owner Jerry Jones, will own about 55% of the combined company, while current Faze investors will own the remainder.
More popularly known as Faze Clan, the esports brand shot to prominence more than a decade ago when its founding members attracted millions of viewers to YouTube gameplay videos of "Call of Duty."
The deal will bring back some of the founders of Faze back to the company, with Richard Bengtson taking the mantle of CEO of Faze, which will be an independent division of GameSquare.
Faze, whose loss widened to $168 million in 2022 from $36 million a year ago, ousted former CEO Lee Trink in September.
The deal is expected to close in the fourth quarter of 2023 and GameSquare sees over $18 million in cost savings from the purchase.
The boards of both the companies have approved the deal.