Mail.Ru acquires largest Russian esports company in $100m deal
Esports "forecast by some to overtake the traditional sports market over the next decade," says Mail.Ru CEO
Russian internet giant Mail.Ru has inked a deal worth more than $100 million for the complete acquisition of leading esports company, ESforce.
Mail.Ru will acquire 100% of ESforce in an all-cash transaction, plus a further payment at the end of 2018 based on key performance incentives, expected to be be around $20 million.
Commenting on the acquisition, Mail.Ru Group CEO Boris Dobrodeev said esports is "forecast by some to overtake the traditional sports market over the next decade."
According to recent estimates from Superdata, the global esports market is worth around $1.6 billion with around 300 million users.
ESforce is the largest esports firm in Russia and eastern Europe. The company owns two major competitive organisation - Virtus Pro and SK - and organises tournaments for the world's best Dota 2 and Counter-Strike: Global Offensive teams.
Included in the varied portfolio of ESforce is the Moscow Yota Arena, one of the world's largest esports tournament venues, and merchandising retailer Fragstore which is present in over 20 countries.
Investment in the business has grown steadily over recent years with around $60 million of funding to-date. In 2017, ESforce posted a negative earning before taxes, depreciation, and amortization of $15 million.
However, ESforce revenues for 2017 are estimated to be around $19m which equates to a growth 150% growth on the year prior.
Mail.Ru expect that with the prior investments into ESforce, the company will continue to scale and a revenue growth of between 80-100% is anticipated for 2018, with losses halving as the business moves into profitability at the end of the year.
"ESforce is one of the global leaders and has built a dominant presence in all of the key verticals," Dobrodeev added. "We are very pleased that the talented team who have been responsible for building this business will all be remaining with the business.
"The very obvious strategic fit with Mail.Ru Group needs little explanation and we will be looking to leverage our unrivalled position inside of the social networks and gaming in order to drive ESforce to even greater success. We are very excited by this acquisition and believe it fits well with all of our key strategic priorities."