SBC News Voice of the Sports Betting Industry
The news that the board of Unibet’s parent company Kindred Group has approved a €2.6bn cash offer from La Française des Jeux (FDJ) comes at a crucial time for the online gambling industry in France, and further rocks the competitive landscape of European gambling across all verticals…
For FDJ the announcement follows its acquisitions of Premier Lotteries Ireland and ZEturf in the past 12 months and is further confirmation of the expansion drive it has pursued since it was privatised in 2019.
Should the deal go through it will be the French group’s largest acquisition ever and turn it into a European powerhouse of online gaming and betting. The ZETurf transaction enabled FDJ to become a top four online betting operator in France and the acquisition of Unibet would propel it into the top 3 of French OSB brands behind Betclic and Winamax.
By acquiring Kindred Group, FDJ would also expand its European reach. Along with leading positions in Sweden, Denmark and unregulated Norway, Unibet is a market leader in Holland and Belgium and is active in Romania and Spain. It will be worth keeping an eye to see how it deals with Norway, an important Scandi market for Unibet.
On the product front, Kindred’s Maria Casino, 32Red or bingo.com brands would provide further diversification for FDJ and, should the vertical become regulated in France, ready-made B2C brands to go live with.
Recall, despite its recent focus on online channels, digital gaming currently generates around 2% of FDJ’s revenues. By incorporating Kindred the French group would push that figure to up to around 20%.
Acquiring share
The team at Regulus Partners echoed this point. It said the “key reason for the bid is strategic” as FDJ generates “only c€250m” of online revenues from “genuinely open competition (prior to the Zeturf acquisition)” and therefore “has a desultory c11% market share in the competitive French online market despite a strong brand, ubiquitous distribution, lottery cash flow, and a land-based betting monopoly”.
In addition, the transaction would deliver FDJ a bona fide sportsbook with strong market share, but, according to Regulus (see below), just below the level where the competition authorities would get involved.
Regulus noted that FDJ targeting Kindred also made sense from a competition-regulatory perspective. “Kindred has a c12% share of the French (OSB) market,” it said, “giving the combined entity a compelling 23%: big enough to be tier one, not big enough to be a competition issue.”
“While Winamax and Betclic have stronger market positions in France, they are likely to be too expensive and would risk not passing competition scrutiny given combined market share with FDJ would be comfortably over 30%,” added Regulus.
More broadly, these issues also echo with the topic of online casino regulation in France. While Kindred is not directly part of that dynamic, it has the know-how and brands that would enable FDJ to hit the ground running should or when the vertical becomes legal.
Only last week, France’s biggest casinos wrote to the government to complain of FDJ’s broad remit and ability to be active across all gambling verticals; a view that is also shared by the country’s online bookmakers.
Behind closed doors there is strong criticism of FDJ’s aggressive corporate strategy as commercial stakeholders discuss the issue. But as one online brand told Gaming & Co: “FDJ has a free hand when it comes to how it operates; whether in relation to products, regulatory models or M&A.”
Successful close
For Kindred, the deal would see it successfully close out a turbulent 24 months. During the period it hastily exited the Netherlands in October 2021 before reentering the market a year later, closed off its US activities, saw its CEO Henrik Tjarnstorm step down amid pressure from activist investors Corvex Management and more recently from Eminence Capital, one of Entain’s newest board members.
The “strategic review” Kindred initiated in April 2023 and the group’s market share in France quickly led to speculation that FDJ would be circling around the Swedish company.
FDJ’s €2.6bn offer represents a 24% premium on Kindred’s share price. The Swedish group also released Q4 figures this morning, revenues were up 2% YoY to £313m and EBITDA rose 45% to £57m, with regulatory issues in Norway and Belgium affecting growth, it said. The group confirmed its 2024 EBITDA targets of £250m.
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Article is published by SBCNews in partnership with Gaming&Co.
