The Stars Group has continued its global M&A initiative, with the $4.7bn purchase of Sky Betting and Gaming (SBG) from CVC Capital Partners and Sky Plc.
Following its portfolio diversification through CrownBet and William Hill in Australia, the cash and stock transaction seeks to create the “the world’s largest publicly listed online gaming company.”
The overall value of the transaction sees $3.6bn payable in cash, with the remainder via 37.9m newly issued shares, representing approximately 20% of the group.
“The acquisition of Sky Betting & Gaming is a landmark moment in The Stars Group’s history”
Regarding its corporate debt capacity, The Stars Group, home of PokerStars, details an enhancement to $6.9bn, made up of $5.1 billion of first lien term loans, $1.4 billion of senior unsecured notes and a $400 million revolving credit facility.
Rafi Ashkenazi, the Company’s chief executive officer, explained: “The acquisition of Sky Betting & Gaming is a landmark moment in The Stars Group’s history.
“SBG operates one of the world’s fastest growing sportsbooks and is one of the United Kingdom’s leading gaming providers. SBG’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.
“Following this transaction, The Stars Group will have significantly enhanced scale and a highly-regarded global brand portfolio. As a result, we are well positioned to realise our vision of becoming the world’s favourite iGaming destination.”
In its statement SBG states that its “home to the United Kingdom’s largest active online player base,” as well as stressing that in excess of 80 percent of revenues were generated from mobile devices.
In its FY2017 results SBG announced revenues of £624m and adjusted EBITDA of £202m, represented annual growth rates of 46% and 51% respectively.
“This agreement is an important milestone in SBG’s growth story”
Richard Flint, Sky Betting & Gaming’s chief executive officer, said: “We are delighted to join forces with The Stars Group. “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.”
Detailing the operational and financial benefits of the acquisition, The Stars Group outlined:
- Greater revenue diversification and significantly enhanced exposure to sports betting, the world’s largest and fastest growing online gaming segment, as the majority of SBG’s revenues are generated by sports betting.
- An increased presence in regulated markets, particularly within the United Kingdom, the world’s largest regulated online gaming market.
- The development of sports betting as a second low-cost customer acquisition channel, complementing The Stars Group’s core poker business and enabling more effective cross-sell to players across multiple verticals.
- Improved products and technology as a result of the addition of SBG’s innovative casino and sports book offerings, and portfolio of popular mobile apps.
- Identified cost synergies of at least $70 million per year.
Commenting on the sale, Pev Hooper, partner at CVC, stated: “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.”
Jeremy Darroch, group chief executive officer at Sky, added: “This agreement is an important milestone in SBG’s growth story and a testament to what we and the whole SBG team have achieved. We look forward to the next chapter and continuing our long-term partnership with SBG as part of The Stars Group.”