Game Changer! The Stars Group agrees to acquire Sky Bet for $4.7 billion

Toronto TSX-listed The Stars Group Inc continues its M&A drive, confirming this morning that it has reached an agreement with private equity firm CVC Capital Partners and Sky Plc to acquire Sky Betting & Gaming (SB&G) outright.

Seeking to create the world’s ‘most valuable, listed online gambling enterprise’, the Stars Group governance has put forward a ‘cash and stock transaction valued at $4.7 billion (€3.9 billion)’.

“The acquisition of Sky Betting & Gaming is a landmark moment in The Stars Group’s history,” stated The Stars Group Inc Chief Executive Rafi Ashkenazi.

“SB&G operates one of the world’s fastest growing sportsbooks and is one of the United Kingdom’s leading gaming providers. SB&G’s premier sports betting product is the ideal complement to our industry-leading poker platform. The ability to offer two low-cost acquisition channels of this magnitude provides The Stars Group with great growth potential and will significantly increase our ability to create winning moments for our customers.”

This March, SB&G governance disclosed full-year 2017 revenues of + £600 million, combined with an adjusted operating EBITDA of + £200 million, representing a compounded annual growth increase of circa 50% per metric.

In 2018, the Leeds based online gambling group has detailed that it services a player base of ‘+2 million active customers’, with over 80% of revenues generated from mobile devices.

“We are delighted to join forces with The Stars Group,” stated Richard Flint, Sky Betting & Gaming’s Chief Executive Officer.

“We have had a fantastic last few years and would like to thank CVC and Sky for supporting us in becoming a leading online operator in the UK. This transaction allows us to offer our best-in-class products to a truly global audience. We’re excited about our future together.”

Updating investors on the transaction’s initial prospects and combined synergies, the Stars Group governance detailed the following enlargement dynamics/benefits;

  • The Stars Group significantly accelerates its revenue diversification strategy, gaining a market leading online bookmaker in Sky Bet
  • The group will bolster its presence within the United Kingdom, the world’s largest regulated online gaming market.
  • The TSX firm acquires SB&G’s in-house development team improving its overall product portfolio and operational technologies.
  • Furthermore, the accelerated development of its group sports betting verticals will create a supporting ‘low-cost customer acquisition channel’ complementing its flagship PokerStars business.
  • In the update, the Stars Group has identified a an initial $70 million (€56 million) per year in combined ‘cost-synergy’ savings.

Entering 2018, industry rumours circulated that majority shareholder CVC Capital would push for a public listing of its fast growth SB&G asset. Nevertheless, the agreed $4.7 billion transaction, sees the private equity firm make a significant return on its 2015 £800 million equity investment in the Leeds based online betting enterprise.

Commenting on the sale of SB&G, Pev Hooper, Partner at CVC Capital, detailed: “Richard and his team have done a fantastic job building Sky Betting & Gaming into one of the UK’s largest and fastest growing operators. We have thoroughly enjoyed working closely with the team and our partners at Sky. This combination with The Stars Group opens a new and exciting chapter for SBG to accelerate its international growth, and we look forward to continuing the journey as a shareholder in the combined group.”

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