London-based lottery operator ZEAL Network SE is making a play to acquire digital lottery broker Lotto24 AG in the hopes of creating a digital lottery giant with over 5m customers.
On Monday, ZEAL announced that it had made an all-share voluntary takeover offer for Lotto24, whose shareholders would be offered one new ZEAL share for 1.6 Lotto24 shares. ZEAL says major shareholders holding 65% of Lotto24’s shares and voting rights had entered into “irrevocable tender agreements” supporting the takeover, which ZEAL expects to complete sometime in H1 2019.
The acquisition offer is a family reunion of sorts, as Lotto24 was a former ZEAL subsidiary that was spun off into a standalone entity in 2012. ZEAL is also making a play to reacquire its affiliated company Tipp24 – ZEAL’s former identity – and transform that brand by discontinuing its German-market secondary lottery business and focusing on the online broker segment.
Assuming the deal goes ahead as planned, ZEAL also plans to relocate its headquarters to Germany to focus on accelerating online lottery brokerage growth in that market.
ZEAL CEO Dr. Helmut Becker said the proposed takeover will be “good for shareholders, good for customers, and good for the German federal states and their lottery beneficiaries.” The company has begun discussions with German gaming regulators regarding licensing opportunities and Becker said he looked forward to “a successful and constructive cooperation with Germany’s state lotteries.”
ZEAL says the enlarged company will boast an international customer base of over 5m and, based on current performance, combined billings of around €500m. Outside of Germany, the various firms ZEAL is trying to gather under its umbrella have operations in the UK, Ireland, Spain, Norway and the Netherlands.
ZEAL’s 2017 financial report card showed billings of €280.5m and revenue of €134.3m. Through the first nine months of 2018, ZEAL’s billings are up 5% to €212.4m while revenue grew 19% to €111.2m thanks to new customers increasing by 54%. Through the first nine months of 2018, Lotto24’s billings are up 43% to €236m and revenue rose nearly 50% to €28m as customer ranks grew by more than one-third.