CBS-backed multimedia play Sportsline.com
has called off a $2.5 million deal to acquire fantasy sports firm Sandbox.com, claiming breaches of the purchase agreement forced the move.
Looking to beef up its own online marketing efforts, the Florida-based SportsLine.com agreed to the cash and stock deal in September but, in a tersely statement, the company said the deal was dead.
“SportsLine.com terminated the agreement due to Sandbox’s breach of certain
representations and covenants in the acquisition agreement,” it said. Officials at both companies declined comment on the specifics of the allegations.
Under terms of the original deal, SportsLine.com agreed to pay a maximum of 1.6 million shares common stock and a maximum of $1 million cash for all outstanding shares of the privately-held Sandbox.com, which has a significant presence in New York City. The deal, which was expected to close before year-end, was supposed to create a “direct marketing powerhouse,” but it appears the depressed state of the online advertising market caused some jitters.
Sandbox, which powers fantasy sports games for millions of fans, was seen as an inexpensive way for SportsLine to grab a hold of a database of approximately of five million opt-in names and member information.
“This is an extremely complementary acquisition that will enable SportsLine to accelerate its database marketing efforts and further diversify our revenue base,” SportsLine CEO Michael Levy said at the time.
SportsLine, which competes head-to-head with Disney-owned ESPN.com in the sports publishing business, was looking to focus sharply on direct marketing efforts with the deal and the popularity of fantasy sports and leagues online made Sandbox.com a smart purchase.
Sandbox offers more than 50 free games, including fantasy sports, sweepstakes, arcade and play-for-fun casino games. Its business is built around the Web community model of attracting loyal users and using opt-in personal information for direct marketing by third-party advertisers.
Sandbox has strategic relationships with CNNSI.com and Turner Sports Interactive and licensing agreements with the four big professional sports leagues.