Amid growing competition and massive regulatory pressure in a number of jurisdictions, several major gambling companies have decided since the beginning of the year to undertake merger and acquisition moves. M&A deals have often proved a successful way to blunt competition and to offset the ill effects of regulations that might aim to improve the quality of service but sometimes produce the exact opposite effect.
The past nine months have seen some of the major players of the online gambling field look for and find partners to reduce the negative impact from changes of different nature in the global market. Here are several of the biggest deals that have been undertaken since the beginning of the year and how they are expected to change those involved in them as well as the global online gambling landscape.
Playtech – Snaitech
Playtech announced in April that it had agreed to buy around 70.6% of the total issued share capital of Italian gambling company Snaitech S.p.A. in an initial acquisition deal. Under the terms of the agreement, the gambling tech giant agreed to make a mandatory takeover offer for the remaining shares in Snaitech after the completion of the initial acquisition.
The total purchase price was estimated at €846 million, which Playtech funded with existing cash resources and new debt facilities.
Snaitech generated revenue of €890 million and EBITDA of €136 million last year. The deal is expected to result in annual cost synergies of €10 million for the combined entity. The Italian company operates more than 1,600 betting points around the country. In addition, it also provides sports and horse race betting, online sports betting, and online casino games. Aside from its domestic market, Snaitech also operates in a number of other jurisdictions where it is fully regulated.
Playtech pointed out that the move was part of its newly implemented strategy to focus its business on regulated markets and reduce its reliance on unregulated markets. The company suffered a heavy blow following a massive gambling crackdown in Malaysia, which had previously been one of its key Asian markets. As a result, its share price has dropped more than 50% over the past year and it was forced to issue two profit warnings over that period.
The gambling tech giant, founded by Israeli businessman Teddy Sagi in the late 1990s, now hopes that the addition of Snaitech would help it diversify its geographical revenue and improve the quality of its earnings with a particular focus on regulated markets. It is to be seen whether that strategy will prove successful and will help Playtech leave the financial issues behind.
The Stars Group – Sky Betting & Gaming
The Stars Group, owner of PokerStars, and Sky Betting & Gaming announced in April that they had agreed to complete a landmark transaction that would create a $4.7-billion online gambling behemoth with presence across multiple jurisdictions, massive customer base, and strong positions in key online gambling sectors, including sports betting in which The Stars Group has taken great interest over the past year.
The two companies said that the deal would produce $70 million of annual cost synergies, among other financial benefits.
The transaction was closed on July 11. However, a day later, the UK Competition and Markets Authority announced that it had opened a probe into the deal, without giving much detail about the nature of said probe. The ongoing investigation blocked the beginning of the integration of the two businesses and the transfer of ownership that needed to take place as part of the deal. They will have to wait until the completion of the CMA probe in order to be able to move forward.
Although the watchdog has provided limited details on the matter, it is believed that the investigation was launched due to concerns over the effects a deal of this scope would have on competition in the UK gambling market, which is currently SkyBet’s main market of focus.
The CMA published earlier this month the two sides of its initial enforcement order, which means that The Stars Group and SkyBet can start the planning process for their eventual integration. It is believed that the competition watchdog will release the full results of its investigation in October.
Once the deal is finally closed and the two businesses are successfully merged, The Stars Group will be able to use SkyBet’s experience in the online sports betting vertical to improve its own sports betting business. It is also important to note that the company is among the gambling giants looking to expand their geographical presence in the United States in as many states where sports betting is legal as possible.
The Stars Group currently operates a mobile betting app in the New Jersey regulated market, which it rolled out earlier this month. But it has long been clear that the company is looking to return to the US after it was shamefully banished from the nation after the Black Friday of US online poker back in 2011.
As for SkyBet, it will be able to extend its footprint in a number of jurisdictions after joining The Stars Group. The company currently operates in the United Kingdom, Italy, and Germany.
The Stars Group – CrownBet – William Hill Australia
Australian online bookmaker CrownBet emerged in February as the winning bidder for William Hill’s struggling Australian business. The company, which was controlled by local casino operator Crown Resorts at the time, competed with the likes of bet365, Ladbrokes, and Paddy Power for William Hill Australia.
The final round of bids placed CrownBet against Paddy Power’s local business Sportsbet, but it was the former to win the bidding war. CrownBet agreed to buy William Hill’s ailing Australian operation for A$300 million.
It was announced at around the same time that The Stars Group had reached an agreement with CrownBet’s owners to acquire a 61% stake in the company. It then became clear that the Canadian gambling giant would actually acquire an 80% stake in a move that would allow it enter Australia’s regulated betting market.
The two deals resulted in the creation of the third largest licensed bookmaker in Australia. To mark the beginning of a new era, CrownBet announced in May that it would rebrand. It first picked Sportingbet as its new name, but Paddy Power’s Sportsbet contested its choice in court, arguing that the two brands were too similar and could confuse customers. The court sided with Sportsbet and CrownBet decided that it would eventually rebrand as BetEasy.
It is quite clear that The Stars Group is looking to cement its positions in the global sports betting market by entering as many regulated jurisdictions as possible. In Australia, in particular, the company might face certain difficulties as a result of the massive competition in the local sports betting industry and growing regulatory pressure, including the introduction of a point of consumption tax in almost all Australian states and territories.
The post Biggest Online Gambling Merger and Acquisition Deals Announced So Far in 2018 appeared first on Casino News Daily.
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