Entain are set to acquire Polish sportsbook operator STS in a £750m ($946.3m) deal. The gambling industry heavyweight, formally known as GVC, have gone from strength to strength through a number of high profile mergers, with the acquisition of Ladbrokes Coral in 2018 shooting them to prominence.
Entain completed the takeover of BetCity in the Netherlands in January. They are active in Oceania, pushing forward with Tab New Zealand. In the US they are joint owners of BetMGM alongside MGM Resorts.
Jette Nygaard-Andersen, CEO, is quoted as saying: “We are delighted to be acquiring the leading sports betting operator in Poland, which is a hugely exciting and fast-growing market.”
Entain appear to be looking at mergers as a way of growth as they try to match rivals Flutter. STS is attractive to them due to their prominence in the Polish market. Back in March this year they reported growth for the full year 2022.
Entain Share Price Falls
Entain shares initially grew in value at the news, going from £12.83 at the middle of the trading day to £13.21.
However, after analysts scrutinised the deal, Entain then proceded fall to the bottom of the London blue-chip index. Entain shares fell 10.5% to their lowest since March 29.
After the European market close on Tuesday, the sports-betting and gaming company said it will pay 24.8 Polish zlotys ($5.97) for each STS shares in a 750 million pounds ($946 million) deal, which will expand its reach in Europe. Matt Britzmann, equity analyst at Hargreaves Lansdown explained:
“Strategically the deal makes sense, it continues the expansion into fast-growing regions and leverages many of Entain’s existing capabilities. The price is a sticky point,”
Entain announced on Wednesday that it had raised around 600 million in equity issuance to help pay for the acquisition. According to analysts, the deal valued STS at almost 11 times its expected cash profit (EBITDA). Entain said its Central and Eastern Europe venture, Entain CEE, and partner EMMA Capital, will fund the STS offer in proportion to their ownership in Entain CEE – about 75% and 25%, respectively.
“Management expects the deal to be earnings accretive in the first full year, including impact of the equity raise; we estimate low single digit,” Citi said in a note. “Some investors may question capital being allocated into such deals.”
STS was founded in 1997 and is the one of the largest bookmakers in Poland. It has licences to operate in the UK and Estonia. Its shares surged to December 2021 high, last up 12.3%.
Meanwhile former GVC pair Lee Feldman and Kenny Alexander were recently involved in the purchase of a 6% stake in 888 Holdings.
