Gambling Industry Acquisitions, Mergers and Financial News — Weekly Round-up for January 11, 2019

OPAP To Acquire Majority Interest In GML Interactive

51 percent stake comes with a Euro 94.86 million price tag

OPAP S.A. subsidiary OPAP Investment Ltd has agreed to acquire 51 percent of Stoiximan Group’s Greek and Cypriot operations under GML Interactive Ltd (‘GML’), a 100 percent subsidiary of TCB Holdings Ltd (TCB), for a total consideration of Euro 94.86 million, plus net cash as of the closing date.

“Stoiximan Group generated revenues of Euros 136 million and EBITDA of c. Euros 16 million in 2017. Revenues increased further in the first 11 months of 2018 (+30% y-o-y), demonstrating significant growth across all jurisdictions, while the active customers’ base has also climbed by 29% vs. 2017,” a press statement reads.

“Stoiximan’s strategy remains focused on strengthening its position in the domestic market and intensifying its technology orientation, while at the same time actively pursuing further expansion.”

Nektan Report Record Total Revenues In Q2 Trading Update

B2B platform and distribution a star performer in terms of quarter-over-quarter growth

Gaming technology platform and services provider Nektan plc reported record unaudited total revenues in its second quarter trading update.

Key performance indictors include:

  • Total Gaming Revenue of GBP 8.6 million, up 83 percent y-o-y and 28.4 percent compared to the previous quarter.
  • Cash Wagering was GBP 222.5 million, up 74 percent year over year and 22 percent on the previous quarter.
  • Growth was driven primarily by a significant increase in the number of unique players on Netktan’s B2B platform and four new partners going live.
  • Nektan said it expects EBITDA to break even by the end of its Full Year, June 30 2019.

Excluding the Company’s US division, the combination of both its B2C and B2B divisions has seen this latest quarter deliver stronger than expected growth, leading to record quarterly revenues.

“The higher margin B2B division has been a particular standout with significant increases in commercial partnerships, player numbers and cash wagering, with the highlight being Nektan’s new partnership with global tier-one online gaming company, BetVictor,” the update reads.

Split by sector, Nektan’s B2C White Label Managed Casino Solutions Net Gaming Revenue dipped 3.1 percent to reach GBP 6.2 million compared to the previous quarter but grew 31.9 percent y-o-y. The decline was attributed to higher than expected player wins and bonusing.

First time depositers declined 6.8 percent compared to the first quarter and 1.6 percent y-o-y. Cash wagering dropped 5.8 percent to reach GBP 168 million over the previous quarter but growth of 31.5 percent was reported y-o-y.

In an update on Nektan’s B2B platform and distribution channel, gross gaming revenues reached GBP 2.4 million, up 700 percent on the previous quarter. Unique players grew 1811 percent to reach 77,961 and cash wagering amounted to GBP 54.5 million, up 1229 percent over the previous quarter.

Nektan is in advanced talks regarding the sale of 57.5 percent of the issued share capital of its US subsidiary, Respin, for a total consideration of GBP 2.0 million in cash as well as the injection of GBP 300,000 in working capital to Respin by the investing entity. These developments are expected to be concluded before the end of Q3 FY19.

Lucy Buckley, Chief Executive Officer of Nektan, said:

“This record-breaking quarter for the Group has not only highlighted that we have made significant enhancements to our technology, but we are becoming a firmly established business that is on track to be profitable in our core European business by the end of this financial year ending 30 June 2019.

Looking back at this quarter and ahead, we are very excited about the size of partners we are now attracting. Our BetVictor contract win with this tier-one operator is a landmark for Nektan and we are proud to have them believe in the breadth and depth of our offering. The B2B figures continue to demonstrate the huge potential that that division has in fuelling our growth going forward.

Another significant highlight from the end of the last quarter was the announcement of potential external investment in our US business. Once completed, we believe these developments will put Nektan in its strongest and most secure position to date.”

William Hill’s MRG Acquisition Given The Green Light (Update)

By competition authorities in all jurisdictions

In an industry update, William Hill said it had received all necessary competition approvals for the acquisition of Mr Green & Co AB (publ) (MRG).

The Offer is now no longer conditional upon any approvals from authorities and shareholders have until Thursday 17 January 2019 to sign acceptance forms and submit them to Danske Bank A/S, Denmark, Sverige Filial.

“Provided that William Hill on or around 21 January 2019 announces that the conditions for the Offer have been satisfied or that William Hill has otherwise resolved to complete the Offer, settlement is expected to begin on or around 25 January 2019,” a press statement reads.

GVC Holdings Cancels CVR’s

In response to maximum stake cut on B2 gaming machines

GVC Holdings has cancelled Contingent Value Rights (CVRs) following the cutting of maximum stakes on B2 Gaming machines to GBP 2.

Representatives of GVC and the CVR holders consulted with one another on the value of the CVRs agreeing that the CVRs, and the loan notes which each CVR holder may have had a right to, issued as part of the consideration for the acquisition of the Ladbrokes Coral Group, have zero value.

Consequently, the CVRs have been cancelled and are not available for re-issue.

Lottoland Objects To Zeal’s Lotto24 Deal (Update)

CEO preparing counter offer

Nigel Birrell, chief executive officer of Lottoland Holdings Limited – a shareholder of Zeal Network, has expressed his strong opposition at the prospect of Zeal Network’s takeover of German lottery firm Lotto24 AG (see previous InfoPowa reports).

In a letter addressed to Zeal Network’s CEO Dr Helmut Becker and CFO Jonas Matsson, Birrell states “the Transaction makes no strategic or economic sense and will result in a massive loss of billings and a substantially lower margin”.

Birrell poses nine questions, the answers to which he proposes be made available to shareholders and other interested parties in a public forum.

Among those he questions the connection between Zeal shareholders Günter Group, Oliver Jaster and The Working Capital Group asking “Are they acting in concert?” and is “the Working Capital Group even acting for Oliver Jaster?”.

Birrell believes the takeover will result in “value destruction” and has called for the delay of Zeal’s annual general meeting on January 18 where the deal is scheduled to be voted on.

An alternative offer for “certain assets” of Zeal Network will be put on the table by January 31, 2019 by Lottoland, Birrell concludes in the letter, one that he believes will provide a “better outcome for all shareholders”.

The full text of the letter can be read here.

Zeal Responds To Open Letter From Lottoland CEO

“Remains open to discussing serious alternative proposals” until EGM on January 18 2019

In response to an open letter penned by Nigel Birrell, CEO of Lottoland Holdings and shareholder in ZEAL Network SE (see previous InfoPowa report), ZEAL said it had yet to receive any proposals for alternative transactions but remains open to discussing serious alternative proposals until 18 January 2019 when the Extraordinary General Meeting will take place as planned.

“ZEAL believes that the intention behind Lottoland’s comments is to interfere with the planned takeover of Lotto24 and spread uncertainty,” the press statement reads. “Given Lottoland’s obvious position as a direct competitor, ZEAL cautions all shareholders to treat their comments with due scepticism.”

Zeal’s chief executive officer, Dr Helmut Becker, reiterated that reuniting ZEAL and Lotto24 has the strongest strategic rationale in their opinion, offering the best opportunity for sustainable growth and creates the most value for ZEAL’s shareholders.

“Strong opposition from a competing secondary lottery operator is clear and compelling evidence that our transaction is the best way forward for our company and our shareholders,” he said.

Zeal Says No EGM, No Deal On Lotto24 Takeover (Update)

Warns shareholders of 12 month cooling off period under German law before another bid can be considered

ZEAL Networks’ bid to “reunite” with Lotto24 AG would be derailed if shareholders vote to postpone the Extraordinary General Meeting (EGM) scheduled for January 18, 2019 in which a vote on ZEAL’s takeover bid of Lotto24 AG is scheduled to take place.

The statement follows a public statement from LottoLand who called for a postponement on the EGM amid claims that the deal was not in the majority of shareholder’s interests (see previous InfoPowa report).

ZEAL Network said: “… it would like to clarify for shareholders that the proposed adjournment, if shareholders attending the meeting were to give their consent, would result in termination of the planned takeover bid for Lotto24 AG (“Lotto24”) and a cooling-off period of 12 months before a potential new bid could be made, due to the German takeover law process framework for the transaction.”

“Contrary to Lottoland’s representation, ZEAL shareholders would therefore not be able to choose between the Lotto24 transaction and any transaction Lottoland may or may not propose in the future.”

Dr Helmut Becker, CEO, ZEAL, commented:

“There are currently no other proposals on the table for shareholders to consider and we have no evidence that any serious alternative offers will materialise. We remain open to discussing serious proposals until 18 January when our shareholder meeting will take place as planned. However, seven weeks have already passed since we first announced our proposal, and we are already holding the meeting towards the end of the regulatory timetable. Our plan to reunite ZEAL and Lotto24 has the strongest strategic rationale, offers the best opportunity for sustainable growth and creates the most value for ZEAL’s shareholders.”

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Brian Cullingworth

Brian Cullingworth

Infopowa news was a staple of Casinomeister’s news from 2000 until 2019. Brian Cullingworth was the main writer, contributor, and was one of the most knowledgeable persons I have ever known involved in the online casino industry.

We first met in January 2001 at the ICE in London where I observed him going booth to booth interviewing online casino, software, and licensing jurisdiction representatives. Brian was also heavily involved with our forum as “Jetset“, he was involved as an informal consultant to eCOGRA, the OPA, and was a player advocate who assisted countless aggrieved players with his connections to industry folks. He also published “Casino Cautions” via Infopowa news for quite a number of years. These can be found in our news archives.

His passing in February 2019 was a dark day for us. He will be forever missed.

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