Posted on: August 11, 2022, 11:34h.
Last updated on: August 11, 2022, 11:34h.
Entain sees a bright future for its gaming operations. It already has a strong global presence, but is going to ramp up its operations in Europe, starting with Croatia.
As earnings continue to increase, Entain is going to make the most of its capabilities. It announced that it is going to acquire 75% of SuperSport Group, a sports betting and gaming company that controls 54% of the Croatian market. This marks the company’s fifth acquisition so far this year.
The acquisition will be the result of a new partnership Entain is forming with Czech Republic-based EMMA Capital, the current owner of SuperSport. The two will create Entain CEE, which will subsequently take over the operator.
European Gaming a Hot Market
The purchase is a lucrative move for Entain, which is coming off a 20% year-on-year increase in profit across the first six months of the year. SuperSport’s control of the Croatian market was too strong to be ignored, enticing the Ladbrokes owner to make a move.
The acquisition, however, is just one piece of a larger puzzle. In announcing the deal, Entain added that it will likely serve as a springboard for additional expansion throughout Central and Eastern Europe.
This bespoke structure will allow Entain to join with further leading local operators through Entain CEE to continue to grow this unique platform across the region,” said Entain’s board about the SuperSport acquisition.
Supporting the idea of further expansion in the region, Entain’s board highlighted the presence of a number of strong operators currently providing services. However, these, it said, have not been able to expand, a problem Entain can help them resolve.
The cost of Entain’s portion of the purchase is €690 million (US$712 million) with a drawn-out ROI. Entain stated in its press release that the acquisition will result in “preliminary cost synergies of €5 million” (US$5.78 million) a year.
In addition to the cash payment, Entain could have to offer more money down the road. Provided SuperSport achieves certain financial milestones this year, another €90 million (US$92.98 million) could change hands.
Adding EMMA’s financial contributions, the entire deal is worth €920 million (US$950.54 million). This gives it a transaction multiple of 9.6x of SuperSport’s 2022 EBITDA (earnings before interest, tax, depreciation and amortization).
Before it can take over, Entain has to secure all the necessary regulatory approvals. However, it expects everything to be in place before the end of the year. In addition, if things go well, Entain has the right to buy out EMMA three years later.
Entain Gains Strength
Entain saw its online gaming revenue slip in the first half of the year, but it made up for it elsewhere. The online segment lost 7%, but its group revenue of £246.5 million (US$301.34 million) offset the drop.
The company’s partnership with BetMGM is helping. Entain expects the joint venture to report at least $1.3 billion in net gaming revenue at year’s end. Partially as a result of that entity’s strong performance, Entain reported a year-on-year increase in operating profit of 175% for the first six months of 2022.
In addition, the company reported growth in Australia, Brazil and other markets. As a result, it expects full-year pre-EBITDA earnings of between £925 and $975 million (US$1.13 billion and $1.19 billion).
It will also pay out dividends for the first time since 2019. This September, shareholders will receive a total of £50 million (US$61.08 million) at £0.085 (US$0.10) a share.