The Stars Group Acquires Sky Bet for in $4.7B Deal
PokerStars parent The Stars Group (TSG) has announced its acquisition of Sky Betting and Gaming (SBG), parent company of Sky Bet, in a cash and stock transaction valued at $4.7 billion. According to a Stars Group announcement, the deal will create the “world’s largest publicly listed online gaming company,” surpassing the industry’s recent-years growth king, GCV Holdings.
Sky Bet is a large and growing brand with a prominent mobile-betting presence, helping is surpass some of the UK’s stodgier brands … William Hill and the old Ladbrokes coming immediately to mind. Parent company SBG states that 80% if its revenue is generated via mobile-device play.
As such, the deal is a natural in TSG’s continuing push to become a multi-service family of brands, expanding around the PokerStars business at the company’s core.
The Stars Group is touting these financial and operational benefits as part of the deal:
- Greater revenue diversification and significantly enhanced exposure to sports betting, the world’s largest and fastest growing online gaming segment, as the majority of SBG’s revenues are generated by sports betting;
- An increased presence in regulated markets, particularly within the United Kingdom, the world’s largest regulated online gaming market;
- The development of sports betting as a second low-cost customer acquisition channel, complementing The Stars Group’s core poker business and enabling more effective cross-sell to players across multiple verticals;
- Improved products and technology as a result of the addition of SBG’s innovative casino and sports book offerings, and portfolio of popular mobile apps;
- Identified cost synergies of at least $70 million per year.
“The acquisition of Sky Betting & Gaming is a landmark moment in The Stars Group’s history,” said Rafi Ashkenazi, TSG’s Chief Executive Officer. “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 realize our vision of becoming the world’s favorite iGaming destination.”
On the flip side, Richard Flint, Sky Betting & Gaming’s Chief Executive Officer, offered a similar loving quote: “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.”
The mildly leveraged deal is expected to be finalized later this summer or fall, depending on the expected regulatory approval. The cash portion of the acquisition fronted by TSG is for $3.6 billion, with the remainder of the purchase price coming from $1.1 billion in newly-minted TSG stock.
When added to TSG’s recent major pickups in the Australia market (CrownBet and William Hill Australia), this deal truly makes TSG a three-pronged operator. According to TSG’s announcement, “the Company’s 2017 revenue mix by product would have been 37% poker, 34% sportsbook and 26% casino,” had all the new brands been incorporated into those numbers.
TSG and the Stars family of brands had been moving in that direction for most of this decade, but via acquisitions, the non-poker part of the company’s business may yet reign supreme this year or next, instead of several years down the road.