Struggling Spanish gaming operator Codere is mulling selling off some of its Uruguayan business to Chilean rival Sun Dreams.
Earlier this week, Spanish media outlet El Confidencial reported that Chile’s largest gaming operator Sun Dreams had made an offer to acquire a 50% stake in Codere’s Uruguay operations, which include two racetracks, six gaming halls, 26 betting points and 2,252 gaming terminals.
Sun Dreams’ offer reportedly values Codere’s Uruguayan business at over €150m and El Confidencial’s sources claimed Codere was poised to accept the offer if and when it is submitted via formal channels. For the moment, Codere would only say that it routinely entertains such offers if they meet the company’s strategic and financial objectives.
Sun Dreams, which operates casinos in Chile, Peru, Colombia and Panama, has reportedly enlisted PricewaterhouseCoopers to go over the Uruguayan operations’ books before pulling the trigger. Assuming no red flags are uncovered, the report claimed the sale could get done within a few weeks.
In June, Spanish media reported that Codere had tasked Credit Suisse bankers with conducting a review of its underperforming international operations to determine whether to sink more money into lost causes or to cut its losses.
In August, Codere issued a profit warning due to concerns over the rapid currency devaluation in Argentina, the company’s largest market by revenue. Ironically, Codere cited improvements in its Uruguayan operations as helping to offset the Argentinian decline.
Codere’s Uruguayan business generated revenue of €18.4m (+0.7%) and earnings of €5.1m (+22%) in the three months ending June 30. The Uruguayan unit’s 2018 revenue and earnings totaled €79m and €20.2m, respectively.
Codere’s overall Q2 revenue was down 5.9% to €354.7m while earnings rose 11.5% to €83.1m. The company booked a net loss of €4.8m for the quarter, but that was a damn sight better than the nearly €36m loss Codere reported in Q2 2018.
