On Tuesday, Sportech announced that it had entered into an exclusivity deal with venture capital firm Burlywood Capital, which is seeking to acquire The Football Pools business for a total cash consideration of £97.25m. Sportech cautioned that there was no guarantee the deal would go through.
Burlywood, which was founded by Blandford (pictured) and investment banker Andrew Burnett, says it will fund The Football Pools acquisition via a combo of institutional investors’ equity and a new debt facility.
Burlywood plans to form a new company that will apply for a listing on London’s Alternative Investment Market (AIM) index. This company will be chaired by ex-Sportech man Ian Hogg, while current Football Pools managing director Conleth Byrne will serve as CEO. Brian Mattingley, chairman of 888 Holdings, will serve as non-executive director.
The deal is contingent upon Burlywood raising the necessary cash and will require the approval of Sportech’s shareholders, but Sportech believes the potential sale of The Football Pools is “an attractive opportunity” in keeping with Sportech’s desire to modernize and transition its business model.
The Football Pools business reported revenue of £33.8m and earnings of £15.2m in 2015 and Sportech has since taken pains to upgrade the division, including the launch of a new mobile app this spring. Sportech said the business had “stabilized” in H1 2016, with revenue of £14m and earnings of £7m.
The Football Pools business was launched in 1923 and performed well until the launch of the National Lottery in 1994 and the subsequent rise of online betting. The division is believed to have between 200k and 300k active customers, down from 10m in its heyday.