The highly anticipated FaZe-GameSquare merger may be finalized next week as FaZe Clan shareholders prepare to cast their votes on the matter
FaZe Clan shareholders will vote next week on merging with GameSquare, a company that is co-owned by Dallas Cowboys owner Jerry Jones. The FaZe Clan Board of Directors fully supports this decision and advises shareholders to vote in favor of the FaZe-GameSquare merger on February 16. According to Bloomberg, the all-stock deal is valued at around $17 million, marking a significant decrease from Faze's $725 million valuation during its special purpose acquisition company (SPAC) merger in July 2022.
Exclusive: FaZe Clan is being acquired GameSquare in a deal worth about $17m. Members Banks, Apex and Temperrr will take executive positions. https://t.co/uIhxpQBdgo
— Cecilia D'Anastasio (@cecianasta) October 20, 2023
The FaZe-GameSquare Merger Explained
The FaZe-GameSquare merger has been in the works since late October 2023, when GameSquare revealed its plans to acquire FaZe Clan. The proposed deal would see FaZe become a part of GameSquare, obtaining about 45% of the shares in the new entity, valued at approximately $16 million. This valuation is considerably lower than FaZe Clan's initial worth of one billion dollars before its IPO through SPAC.
This agreement marks the conclusion of a turbulent period for Faze Clan. It all began when the esports organization went public in July 2022, having been valued at $400 million just the prior May. However, chaos soon followed. Since becoming publicly traded on the Nasdaq exchange through the SPAC, Faze Clan, like many in the esports sector, has faced challenges. Bloomberg reports the company recorded a $28.4 million loss in the first half of 2023.
Over the summer, the organization was embroiled in various accusations of sexism and homophobia; its stock price plummeted to $0.18 after reaching a high of $24.69 in August 2022; approximately 40 percent of its staff were let go in May; and former CEO Lee Trink departed from FaZe on September 13, among other unfavorable developments.
Credit: FaZe Clan
Even with these setbacks, FaZe Clan continues to hold significant sway in the world of esports. With a massive following of 260 million across social media platforms, as reported by GEEIQ, FaZe arguably commands one of the most dedicated fan bases in the industry. In light of this, it's understandable why a savvy business might view FaZe's reduced share price as an enticing opportunity despite the potential risks involved.
The FaZe-GameSquare merger will hand back the leadership of the organization to its original founders. Richard “Faze Banks” Bengtson will lead as CEO, Thomas “Faze Temperrr” Oliveira will be president, and Yousef “Faze Apex” Abdelfattah will be COO. Faze Clan will function as a separate entity within Gamesquare and intends to reconnect with its core fanbase.
Throughout 2023, FaZe attracted interest from various esports firms, not just GameSquare. Sports Business Journal reported that both GameSquare and Canadian gaming company Enthusiast Gaming were considering acquiring FaZe. Enthusiast later lost interest in the deal, seeing FaZe as too esports-centric for Enthusiast's broader casual gaming portfolio.
FaZe Clan is not the only Esports brand in GameSquare’s investment portfolio. It’s also the parent company of Complexity Gaming, which is one of the oldest North American Esports organizations. Originally, the FaZe-GameSquare merger was planned to be done and dusted before the end of 2023 Q4, but the final confirmation still awaits.
This merger holds significance for Complexity Gaming as well. Reportedly, Jason Lake, the founder and CEO of Complexity, is seeking to raise funds to purchase GameSquare’s shares. This move aims to prevent potential conflicts of interest between FaZe Clan and Complexity during esports competitions.
Also, GameSquare CEO Justin Kenna disclosed that the company secured a commercial spot at the Super Bowl to commemorate the impending merger.