London-based private equity firm CVC Capital Partners has acquired a controlling stake of Sky PLC’s gambling business Sky Bet for a reported £720 million (US $1.13 billion). The pay-TV group will receive £600 million ($940 million) in cash once the deal is completed with the remaining £120 million due at a later date depending on certain conditions. The deal values Sky Bet at £800 million ($1.253 billion), 15x of its EBITDA for the 12 months ending June 30.
Sky will retain 20% of Sky Bet and will continue to have board representation. Sky Bet’s current management team, led by managing director Richard Flint, will remain in place at its headquarters in Leeds. The two companies also agreed on a long-term brand license agreement to keep the Sky Bet name.
In a statement, Sky chief executive Jeremy Darroch said, “In the last 10 years, we have successfully grown Sky Bet from a start-up to one of the leading online betting and gaming companies in the U.K. This transaction will allow us to focus further on the substantial growth opportunities in our core international pay-TV business while realizing significant value for our shareholders.”
The deal is still subject to regulatory approval in the UK and Ireland but both parties expect it to be completed in the first quarter of 2015.
Over the past few years, CVC Capital has been aggressively pursuing opportunities in the gaming industry. The private equity firm was on the verge of acquiring Betfair in May 2013 before negotiations broke down when Betfair management deemed the firm’s £985 million ($1.543 billion) bid “too low“. When the Betfair deal collapsed, CVC set its sights on acquiring a 75% stake in online payment processor Skrill in August 2013 for a reported £600 million.