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Wednesday, 16 January, 2019

Lengthy talks culminated in £3.4bn deal for 'premium asset' Sky Bet

The Stars Group has swooped to buy Sky Bet
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Discussions between The Stars Group and Sky Bet over a deal were ongoing for a year, it was revealed on Monday as the British firm was described as the "premium asset" in the gambling market.

News that The Stars Group had agreed to buy Sky Bet from majority owner CVC and partner Sky for £3.4 billion broke over the weekend and the deal will create the biggest publicly listed company in the online gaming world.

The Canadian gaming company, owners of the online PokerStars platform, had previously been linked to a deal with William Hill, but merger talks collapsed in October 2016.

The Stars Group's chief executive Rafi Ashkenazi told an investors' conference call on Monday: "We have been engaged in a discussion for a while now, for approximately a year. We were exploring the industry and we were looking to conduct a transaction.

"As we advanced with our analysis we realised that Sky Betting & Gaming is really the premium asset out there and in January we started serious discussions with CVC and Sky to acquire this company. I'm very happy to say we were successful doing so."

The Stars Group have their own sports betting operation, BetStars, but Ashkenazi said that wherever possible they would operate the Sky Bet brands, raising the prospect of William Hill's former Australian operation, which was bought by Crownbet in which The Stars Group now has a majority stake, being rebranded as Sky Bet.

Sky Bet also confirmed that chief executive Richard Flint and the rest of the company's leadership team would be staying.

Sky Bet chief executive Richard Flint is staying
Ashkenazi said the deal meant the group was "ideally positioned to enter emerging markets including the United States" but that the prospect of the ban on sports betting being lifted in the US was not behind the acquisition.

"We believe Sky Betting & Gaming is a great company that has a lot of different values which on a combined basis we can capitalise on," said Ashkenazi.

"What it gives us in the US – and not necessarily only in the US, every single market that opens up – is that on a combined basis we will be very strongly positioned to capture a significant market share, the US included. But the trigger for this deal was not the US."

Shares in The Stars Group, which is listed on the Toronto Stock Exchange and Nasdaq, soared by more than ten per cent on the back of the news.

Analyst Simon French of Cenkos said: "We think there is much The Stars Group can learn from Sky Betting & Gaming and that combining these two businesses could create a global, purely online, market leader.

"In an industry where scale matters, this must inevitably negatively impact smaller operators."

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We were exploring the industry and we were looking to conduct a transaction
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