Kindred closes tough 2023 on stable results as key investors back FDJ takeover

Kindred Group Plc has detailed improved financial results and corporate KPIs, closing full-year 2023 trading.

The board of the Stockholm-listed online gambling group published a preliminary trading update due to the €2.6bn takeover offer tabled this morning by Groupe Française des Jeux (Groupe FDJ).

Q4 results saw Kindred achieve period revenues of £313m, reflecting a 2% increase on 2022 comparatives of £306m. The revenue increase reflected ‘stable growth’ in the UK, Netherlands, and Romania, combined with strong results of the Relax Gaming (B2B) unit.

Kindred detailed that headline revenues continue to be impacted by regulatory adjustments in Belgium and Norway, “continuing to impact adversely on overall growth.” Investors were informed that “the share of Gross winnings revenue from locally regulated markets amounted to 82% for the final quarter of 2023”.

Period trading saw Kindred’s sports betting unit withstand “historically low betting margin” of 9.9% (after free bets), achieving a gross win revenue of £115m, whilst its Casino and Games portfolio reported 5% revenue growth.

Impacting results, during Q4 trading Kindred began its withdrawal from US states, where the company reported an EBITDA impact of £6m. Yet focused on ‘cost optimisation’, Kindred declared underlying EBITDA growth of 45% to £57m (Q42022: £39m).

On an annual basis, Kindred reports that it has achieved gross-win revenues of £1.17bn, combined with an underlying FY2023 EBITDA of £205m.

The board of Kindred stands by its preliminary 2024 target, in which the company expects underlying EBITDA to stand at £250m. Upon closing the 2023 accounts, Kindred reports maintaining cash and cash equivalents totaling £240m.

This morning, Groupe FDJ declared its intent to acquire Kindred, putting forward a SEK 130 (€11.40) per share all-cash offer to the firm’s board, a deal valued at €2.6bn and offering investors a 24% premium over the current enterprise value.

The deal is favoured by the Kindred board, who disclosed that FDJ’s approach had secured the backing of key investors. As cited:  “FDJ has obtained irrevocable undertakings to accept the offer and to vote in favour of an amendment of the articles of association in accordance with condition (vi) of the Offer from the Company’s shareholders, Corvex Management LP, Premier Investissement SAS, Eminence Capital, Veralda Investment, and Nordea, representing in total approximately 27.9% of the outstanding shares in Kindred.”

If the deal secures unanimous shareholder approval, FDJ will launch its all-cash tender offer on 19 February 2024, at which point both companies will begin merger proceedings to become ‘Europe’s second-largest operator in the gaming sector’.