French gaming company La Francaise des Jeux (FDJ) has announced a takeover offer to acquire Swedish online peer Kindred Group in a strategic move aimed at solidifying its presence in the European gaming sector.
This move, revealed on Monday, is anticipated to create the second-largest operator in Europe’s gaming industry.
FDJ has proposed an offer of 130 Swedish crowns ($12.43) per share for Kindred, translating to an enterprise value of 2.6 billion euros ($2.83 billion). This offer represents a substantial premium of 24 percent over Kindred Group’s closing price on January 19.
Kindred Group, which initiated a strategic review of alternatives last year, including the possibility of a merger or sale, disclosed that it had garnered interest from “several parties.” The board of Kindred Group, evaluating the available options, deemed FDJ’s offer as the “most attractive outcome for shareholders,” leading to a unanimous recommendation in favor of the acquisition.
In a separate statement, Kindred Group stated, “The Board believes that the terms of the offer recognize Kindred’s long-term growth prospects, taking into account the risks and uncertainties associated with the realization of those prospects.”
Stephane Pallez, FDJ Chairwoman and CEO, has expressed her satisfaction with the proposed acquisition. She highlighted that the combination would result in a “stronger strategic positioning and significant value creation” for the benefit of shareholders and other stakeholders.
La Francaise des Jeux, known for offering lottery scratch cards in France and having the French state as a 20 percent stakeholder, asserted that the takeover of Kindred Group would enhance its earnings and result in an accretion of more than 10 percent in its dividend per share. The move underscores FDJ’s ambitions to expand its footprint in the gaming industry and capitalize on synergies between the two prominent gaming entities.
The acquisition plan is poised to transform FDJ into the second-largest operator in Europe’s gaming sector, with strengthened revenue and earnings growth. Both FDJ and Kindred share a commitment to responsible gaming and a business model that marries performance with responsibility. The combined entity is committed to operating exclusively in locally regulated markets or those in the process of regulation.
This strategic move is expected to create significant value for FDJ shareholders, with a projected accretion of more than 10 percent in dividend per share, set to commence from the 2025 financial year and payable in 2026.
Kindred: A European Gaming Industry Leader
Kindred, a stalwart in the European online betting and gaming sector, stands as one of the continent’s premier operators. With a diverse online portfolio encompassing sports and horse-race betting, poker, and casinos, including renowned brands such as Unibet and 32Red, Kindred has consistently been at the forefront of the industry.
In 2023, Kindred reported revenue (after betting duties) of £893 million, positioning itself as one of the top five operators in Western Europe. Operating in seven of the top ten European markets, including the Netherlands, the United Kingdom, France, Sweden, and Belgium, Kindred boasts over 25 years of experience as an online betting and gaming operator, along with extensive digital expertise and proven technology platforms.
Creating a Diversified European Gaming Champion
The amalgamation of FDJ and Kindred is anticipated to create a diversified European gaming champion. With an expanded international presence accounting for approximately 20 percent of gross gaming revenue (GGR), up from the current 6 percent, the combined group is set to become a highly digitalized entity.
The online share of GGR will skyrocket from 14 percent for FDJ to 29 percent for the merged group. Kindred’s cutting-edge digital expertise and technology platforms are poised to accelerate FDJ’s digitalization for online markets. The new group will offer a wide gaming range in competitive markets, covering online sports and horse-race betting, online poker, and online casinos.
FDJ’s acquisition of Kindred positions the group as the third-largest operator in the online sports betting and gaming open to competition sector in France, courtesy of the acquisition of Unibet.
Strengthening FDJ’s Financial Profile
Kindred, with its impressive 2023 financial performance, generated revenue (after betting duties) of £893 million and recorded an EBITDA of £205 million, boasting an EBITDA margin on revenue of 23 percent. Targeting an EBITDA exceeding £250 million in 2024, Kindred’s financial prowess aligns seamlessly with FDJ’s strategic goals.
The combined force of Kindred and FDJ is expected to usher in accelerated growth in revenues and free cash flow, along with an accretion in recurring EBITDA margin. This aligns with FDJ’s standalone target of achieving at least 25 percent by 2025.
Additionally, the merger is poised to deliver a substantial increase in the group’s earnings per share and overall earnings growth. The move solidifies FDJ’s position as a financial powerhouse in the European gaming landscape.
