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Wednesday, 14 November, 2018

Sky Bet snapped up by Canadian betting giant The Stars Group in £3.4bn mega deal

Sky Bet chief Richard Flint has criticised the FOBT decision
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Sky Bet, the betting business born and bred in Yorkshire, is now part of the biggest publicly-listed beast in the online gaming world after its majority owner CVC and partner Sky agreed to cash in the company's chips to The Stars Group for a whopping £3.4 billion.

It had been expected the gaming giant would soon be floated on the stock exchange, but instead the Canadian owners of the online PokerStars platform have moved to take control of Sky Betting & Gaming in a deal that continues the industry trend for consolidation.

With senior Sky Bet executives such as the organisation's chief Richard Flint having held shares in the business, The Stars Group acquisition represents a huge financial win for them and for CVC, which bought Sky's controlling stake in Sky Bet in a 2004 deal that then valued the bookmaker at £800 million.

CVC and Sky will both retain an interest in an organisation whose annual revenue increased last year to £516m from £374m in 2016 and £248m in 2015.

Sky Bet are also a major horseracing sponsor and was recently unveiled as the new backer of York's Ebor Handicap, which will be worth £1m in 2019.

Flint said: "We are delighted to join forces with The Stars Group. We have had a fantastic last few years and would like to thank CVC and Sky for supporting us in becoming a leading online operator in the UK.

"This transaction allows us to offer our best-in-class products to a truly global audience. We’re excited about our future together."

Sky Bet, recently handed a £1m fine from the Gambling Commission, increases the already weighty power of The Stars Group, which under its old Amaya name chased a merger with William Hill that collapsed in October 2016.

Hedge fund and major William Hill shareholder Parvus Asset Management criticised the deal, but there has been speculation it could be resurrected.

In addition, The Stars Group, the global leader in online poker, is currently completing its acquisition of William Hill Australia and CrownBet.

Sky Bet is a major racing sponsor and will soon take over backing of the Ebor

Stars chief executive Rafi Ashkenazi said: "SBG operates one of the world’s fastest growing sportsbooks and is one of the United Kingdom’s leading gaming providers. SBG’s premier sports betting product is the ideal complement to our industry-leading poker platform.

"The ability to offer two low-cost acquisition channels of this magnitude provides The Stars Group with great growth potential and will significantly increase our ability to create winning moments for our customers."

Ashkenazi added: "Following this transaction, The Stars Group will have significantly enhanced scale and a highly-regarded global brand portfolio. As a result, we are well positioned to realise our vision of becoming the world’s favourite iGaming destination."

Analysts at gambling industry consultants Regulus gave a thumbs-up to the news, arguing: "SBG is the largest online gambling brand in the UK, according to our estimates, with a circa 12 per cent share of the GB market. It has also been the UK’s star performer in terms of market share growth.

"In the space of two months The Stars Group has doubled its size, transformed its product mix, materially mitigated regulatory risk and substantially improved its operational capability.

"While most sector M&A (mergers and acquisitions) has been defensive and/or driven by the weakness of at least one party, in our view, we see this combination as potentially creating a genuinely global (ex Asia) sector powerhouse."


Merger mania

2012 William Hill and GVC agree joint-takeover bid for Sportingbet, with Hills taking on the Australian and Spanish business and GVC the operations in unregulated markets. The deal is completed the following year.

2014 Sky agrees to sell its controlling stake in Sky Bet to private equity firm CVC Capital in a deal that values the business at £800 million.

2015 In February takeover talks between William Hill and online operator 888 collapse after one of 888's founders refuses to back the £700m deal.

In June, the Racing Post breaks the news that Ladbrokes and Coral are in merger talks. The £2.3 billion merger is finally completed in November 2016.

Later that summer Paddy Power and Betfair agree a deal worth more than £6bn. The merger is completed the following February.

In the autumn GVC beats off competition from 888 to acquire bwin.party.

Elsewhere in the industry Unibet – now Kindred Group – buy the Stan James online brand.

2016 In August, Rank Group and 888 abandon a £3bn takeover bid for William Hill.

In October, William Hill walk away from talks about a £4.6bn merger with gaming group Amaya after shareholder unrest.

2017 In June, Kindred Group completes £175m acquisition of online gaming company 32Red.

In December, GVC and Ladbrokes Coral confirm they are in takeover talks.

2018 GVC complete Ladbrokes Coral takeover in March. The deal will be worth up to £4bn, with GVC, owners of the sportingbet and bwin brands among others, holding around 53.5 per cent of the enlarged group. The final price depends on the government's review of FOBT stakes and prizes. The deal is based on a sliding scale, with a valuation of around £3.2bn if stakes are cut to £2 from £100, rising to £4bn if the maximum stake is set at £50.

In April The Stars Group – parent company of PokerStars and BetStars among others – swoops for Sky Bet in a £3.4bn deal.


If you are interested in this, you might also like:

Magic million: Sky Bet make Ebor first seven-figure Flat handicap in Britain

Sky Bet hit with £1m penalty over self-exclusion failures

Sky Bet figures soar as company revels in festival betting bonanza

This transaction allows us to offer our best-in-class products to a truly global audience. We’re excited about our future together.

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