Early Saturday morning, Toronto-listed The Stars Group Inc announced that it had reached a deal with CVC Capital Partners and Sky plc to acquire the UK-licensed SBG online gambling operation for $3.6b in cash and roughly $1.1m in 37.9m newly issued common shares (representing roughly 20% of TSG’s issued and outstanding common shares).
The union of TSG and SBG is expected to close in Q3, assuming regulators in the companies’ respective jurisdictions give their okay. Firing a shot across the newly expanded GVC Holdings’ bow, TSG humble-bragged that the deal would create “the world’s largest publicly listed online gaming company.” TSG also said it expects to realize $70m in annual cost ‘synergies,’ so start updating your résumés, people.
SBG is one of the UK’s fastest growing online gambling operators, generating revenue of £624m and earnings of £212m in 2017, year-on-year improvements of 46% and 51%, respectively. SBG’s brands include Sky Bet, Sky Vegas and Sky Casino.
TSG CEO Rafi Ashkenazi called the deal “a landmark moment” in his company’s history and claimed SBG’s sports betting product was “the ideal complement to our industry-leading poker platform.”
SBG CEO Richard Flint said he was “delighted to join forces” with TSG, while thanking CVC and Sky for helping elevate the firm to its current position. CVC partner Pev Hooper said the fund was looking forward to “continuing the journey as a shareholder in the combined group.” Sky CEO Jeremy Darroch offered dittos on “continuing our long-term partnership with SBG as part of [TSG].”
As recently as January, CVC, which holds 71% of SBG, was said to be mulling a potential initial public offering of the online gambling firm. Reports had SBG valued at £2.5b to £3b, below the £3.35b price TSG has agreed to pay.
TSG lined up $6.9b of fully committed debt financing to fund its latest deal, which follows the recent acquisitions of the online sports betting operations of William Hill Australia and CrownBet. Assuming all these acquisitions are completed, TSG says its formerly poker-dominant revenue mix will be 37% poker, 34% sportsbook and 26% casino.