The Toronto-based operator of PokerStars, which announced the cash-and-stock deal with CVC Capital Partners and Sky Plc on Saturday, is set to win a significant foothold in the U.K., the largest regulated gaming market. Sky Betting & Gaming, or SBG, is growing rapidly in online casino games and sports at home and recently expanded to Italy and Germany.
If an upcoming Supreme Court decision in the U.S. allows sports betting in more states, it would be the “icing on the cake” for the combined companies, according to Simon Holliday, founder of the research firm H2 Gambling Capital.
“The US sportsbetting Supreme Court case is obviously a big part of the potential upside, with Star’s old database, SBG’s strengths and their track record solely in the U.K.,” Holliday wrote in an email. “Even without the U.S., SBG is just starting to launch in other regulated markets.”
Betting on sports in some form is legal in four U.S. states. That could change as the Supreme Court weighs New Jersey’s attempt to have a 1992 law banning sports betting beyond those states struck down as unconstitutional. If the court agrees, it could trigger a wave of states legalizing betting on football, basketball and other competitions.
The acquisition, which follows a failed attempt to take control of Sky-rival William Hill Plc in 2016, helps accelerate Chief Executive Officer Rafi Ashkenazi’s strategy to decrease reliance on the unstable and stagnant poker business, which accounted for two-thirds of its revenue last year.
The deal also provides Stars Group with a trove of potential new customers for its own online casino and poker offerings. SBG’s strengths include technology and marketing, according to H2’s Holliday, who says the company went from the seventh or eighth-largest operator in the U.K. in 2011 to the third largest last year.
The agreement calls on Stars Group to pay US$3.6 billion and approximately 37.9 million newly issued common shares based on the closing price of its common stock on April 20. Stars Group said it has obtained debt financing of approximately US$6.9 billion, including US$5.1 billion of first lien term loans, US$1.4 billion of senior unsecured notes and a $400 million revolving credit facility.
Source: GMB / Bloomberg
