Gambling Industry Acquisitions, Mergers and Financial News — Weekly Round-up for January 18, 2019

By Brian Cullingworth, Last updated Jan 18, 2019

Lottoland Responds With Cash Offer For Zeal Network’s German Assets

Offer valued between Euro 60 million and Euro 76 million

True to its word Lottoland Holdings has submitted an alternative offer in the ongoing Zeal Network-Lotto24 bidding saga (see previous InfoPowa reports) with just barely a week to go before shareholders are scheduled to vote at an extraordinary general meeting.

Lottoland CEO Nigel Birrell said in an accompanying letter: “We believe that our Proposed Offer is deliverable within a shorter timeframe and gives greater certainty and higher value to shareholders.

“In summary, we believe that Lottoland’s Proposed Offer is superior to the contemplated Transaction and – subject to customary/confirmatory due diligence – should be put to shareholders to evaluate.

Lottoland Holdings has proposed the purchase of certain assets and entities of Zeal Network linked to the operation of its German focused business tipp24.com, including the UK-based subsidiary Tipp24 Services Ltd, its customers and any related intellectual property as well as the relevant infrastructure necessary to operate the website.

The Proposed Offer excludes MyLotto24 Ltd, which Birrell believes could be used by Zeal for further expansion of the remaining business.

Lottoland is determining the value of the German business at Euro 38 million offering a 60 percent premium of a minimum Euro 60 million and a maximum Euro 76 million.

Birrell has urged Zeal Network to delay the extraordinary General Meeting until Lottoland’s Proposed Offer has been fully and adequately assessed, “so that a fully informed decision can be made by all shareholders.”

Zeal Rejects Lottoland Offer (Update)

Calls it “significantly inadequate”

ZEAL Network SE has rejected Lottoland’s offer to acquire its core German business assets.

Branding the deal “significantly inadequate”, Zeal said the offer price range of Euro 60 million to Euro 76 million neglects the value of ZEAL’s German business and the sale of which would strip ZEAL of its most valuable asset and the basis for future brokerage growth in Germany.

Dr Helmut Becker, CEO, ZEAL: “The indicative offer from Lottoland is an attempt to buy our core German assets on the cheap.”

“The German business of Tipp24 contributes by far the largest part of ZEAL’s revenues and earnings and at the same time, its client base and brand represent the key part of the growth platform for the future German lottery brokerage business, following the planned transformation of ZEAL’s current German secondary lottery business into a locally licensed online brokerage model and the agreed combination with Lotto24.”

The Executive Board urged shareholders to consider independent analysts’ share price targets for ZEAL, saying the offer does not provide a reasonable basis for engagement with Lottoland.

In light of the rejection of the offer, ZEAL said it would go ahead wit the general meeting on January 18, 2019.

Dr Helmut Becker, CEO, ZEAL, commented: “Our plan to convert Tipp24 into a brokerage business and to combine it with Lotto24 will create a strong platform for future growth and is far superior to the Lottoland proposal.

“The positive preliminary results announced today by Lotto24 further emphasise the attractiveness of the brokerage business model.

“Lottoland’s offer therefore confirms our view that their main intention is to disrupt the Lotto24 transaction, driven by their business interests as a competitor.”

In related news, Lotto24 AG reported encouraging FY2018 preliminary results Thursday.

Billings are expected to reach Euro 321.8 million (2017: Euro 220.7 million), up 45.8 percent and revenue growth is estimated to show growth of 51.8 percent to reach Euro 38.3 million (2017: Euro 25.2 million).

The company expects to deliver gross margin of 11.9 percent (2017: 11.4 percent), and reports 596,000 new customers (2017: 291,000), in total amounting to 2,169,000 (2017: 1,573,000).

Lotto24 expects EBIT to improve to Euro 2.6 million (2017: Euro 1.0 million) and net profit of Euro 7.7 million (2017: Euro 2.5 million) largely as a result of a positive technical tax effect of Euro 5.2 million (2017: Euro 1.8 million) in connection with the formation of deferred taxes.

JPJ Group Anticipates Strong FY Results

Boosted by strong performance of Vera&John business

In a pre-close trading update from JPJ Group for its Full Year results for the year ending December 31 2019, the operator said its Board is confident of reporting FY2018 Revenue and adjusted EBITDA at the upper end of its current market expectations.

JPJ Group said results had been buoyed by consistent trends across the group especially strong organic growth at its Vera&John business across a number of international markets.

Neil Goulden, Executive Chairman, commented: “We are pleased with the performance of the Group during 2018, as we continue to take advantage of the growth opportunities present in international markets, notwithstanding what has been a challenging regulatory backdrop in
the UK.

“We enter 2019 in a strong position to deliver further growth and to create value for shareholders.”

GVC Holdings Plc Pleased With FY Proforma Results

Expects EBITDA to be ahead of current “market consensus”

In a post-close trading update for the year to December 31, 2018, GVC Holdings expects full year 2018 proforma underlying Group EBITDA to be in the range of GBP 750 million – GBP 755 million, ahead of current “market consensus”.

Other full year pro forma trading highlights include:

• Total online net gaming revenue (NGR), up 19 percent.
• A rise in online sportsbetting NGR of 20 percent and sports stakes up 13 percent.
• Online gaming NGR up 16 percent.
• B2B business growth of 17 percent.
• A 3 percent decline in UK Retail like-for-like (LFL) NGR.
• European Retail NGR was up 16 percent boosted by strong growth in Italy of 18 percent.
• Total Group NGR was up 9 percent.

Kenneth Alexander, chief executive officer, GVC Holdings:

“We are materially outperforming the market and taking share in all of our major territories. As the Group carries this momentum forward into the new year, and starts to deliver the opportunities provided by both the Ladbrokes Coral integration and our sports-betting joint-venture in the US with MGM Resorts, the Board is confident that the Group is very well placed for a successful 2019.”

Preliminary Full Year 2018 results will be released on March 5, 2019.

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