Preparing for wave of Eastern Europe acquisitions

Preparing for wave of Eastern Europe acquisitions

A 75% stake in the new venture will be owned by Entain, who will partner with the Czech investment firm EMMA Capital.

SuperSport, which is the largest betting and gaming brand in Croatia, will be acquired by this new business in order to make acquisitions in Central and Eastern Europe.

Entain believes that the deal will be the start of a flurry of M&A activity targeting Central and Eastern Europe, because it cited SuperSport’s market share as one reason for doing the deal.

The business would lead to an exciting platform in this region, according to the Entain board.

The board said that the combination of Entain’s global scale, access to capital and content, EMMA’s regional knowledge and connectivity, and the expert local operational knowledge of Radim and his team makes Entain CEE uniquely positioned to unlock the significant opportunity across the region. Entain will be able to join with other leading local operators through Entain CEE to continue to grow this unique platform across the region.

There was a chance to expand across the region beyond the SuperSport deal, according to the chair.

She said that they were creating a growth platform with considerable opportunity by bringing together Entain’s global expertise and EMMA’s regional investment track record. Expansion across Central and Eastern Europe is a core component of our growth strategy, and we look forward to having radim on board to help drive this opportunity.

The chief investment officer of EMMA said that Entain was well-positioned to take advantage of the opportunities in the region.

EMMA is very happy to be partnering with the leading global betting, gaming and interactive entertainment business to unlocked the opportunity posed by the CEE betting and gaming market. We see the Entain CEE structure as an opportunity for creating value for shareholders, and we look forward to working closely with Entain.

Haluza said he was looking forward to leading the new venture

He said he was looking forward to joining with Entain and further building on the significant opportunity presented in this region. EMMA’s investment expertise paired with Entain’s top-notch platform will offer us the competitive edge in executing the CEE potential. The idea of leading Entain CEE to drive development in fully regulated markets is an intriguing opportunity.

There are a number of businesses in the region that are strong in one market, but they have struggled to expand further, according to the Entain board. The board said that this presented an opportunity for Entain to help these businesses expand.

The CEE market is currently led by local operators who have often struggled to scale or consolidate across the region, which provides a compelling opportunity for Entain with its industry leading capabilities.

An option in the operator’s contract with EMMA will allow it to buy out the entire venture after three years. The business did not say how much it would cost to do that.

Entain also owns Enlabs, which is located in Eastern Europe, but did not mention if it will become part of Entain CEE.

A hero in the local area

Entain will pay 600m in cash to EMMA for the 75% stake in SuperSport, and a further payment depending on SuperSport’s financial performance this year. 90m is expected to be the contingent payment. This would be worth 920m for the entire SuperSport business.

SuperSport’s earnings before interest, tax, depreciation and amortisation are expected to be around 96m, which would suggest an earnings multiple of 9.6x. Its revenue is thought to be around 180m.

SuperSport is expected to contribute positive earnings for the group within its first full year of ownership, and Entain expects cost synergies of 5m from the deal by 2024.

The acquisition will be financed with a 700m bridge loan from a number of banks.

In addition to purchasing the top betting and gaming operator in the very desirable, fully regulated Croatian market, she said, “We are pleased to develop Entain CEE with EMMA to reinforce our strategy across the CEE region.” We see Croatia as an exciting, dynamic country which Entain CEE is perfectly positioned to expand from, and we are very much looking forward to growing our business in the country and the region.

The deal is expected to close by the end of the year.

The deal was announced with the financial report for the first half of the year. The online segment experienced a decline as the business said inflation prompted customers to reduce their spend. With the publication of the preliminary results in July, some investors expressed concern that the online struggles could continue into the future.

Summary:

UK-based online gaming company Entain has agreed to acquire Croatia’s largest betting and gaming brand, SuperSport, from Czech investment firm EMMA Capital. SuperSport, which is the largest betting and gaming brand in Croatia, will be acquired by Entain, which will own a 75% stake in Entain CEE. 600 million in cash will be paid to EMMA by Entain.