The gambling company FDJ wants to take over Kindred.

Last Updated: 23. Januar 2024By

At the beginning of the week, the shares of the European gambling providers La Francaise des Jeux (FDJ) and Kindred saw a strong increase. The reason for this surge in share prices was, as often, the announcement of a takeover offer.

The board of the Malta-based online gambling provider Kindred Group plc confirmed on Monday morning that it had received a takeover offer from its French competitor La Francaise des Jeux SA and recommended that its shareholders accept the offer.

The acquisition would create the second largest provider in the European gambling sector. Before diving into the specific details of the takeover offer, let me introduce you to the two gambling companies briefly.

A Brief Profile of the Involved Companies Kindred Group plc (formerly Unibet Group plc) was founded in 1997 and is headquartered in Sliema, Malta. The company offers online gambling (such as poker, casino games, and bingo) primarily in Europe, Australia, and North America. Additionally, Kindred is a leading sports betting provider.

As of March 15, 2022, Kindred had approximately 30 million registered customers worldwide. The company currently employs around 2,500 people. Kindred’s stock is listed on the Nasdaq Stockholm.

In the fiscal year 2022, Kindred generated a revenue of over 1 billion British pounds (GBP – equivalent to 1.25 billion euros). The operating profit (EBIT) was 132.7 million GBP (155 million euros).

France’s leading gambling provider, La Francaise des Jeux SA, was founded in 1933 and is headquartered in Boulogne-Billancourt (Greater Paris area). The company offers gambling in the form of lottery games (draws and instant games), sports betting, horse betting, and online gambling (poker).

FDJ Group’s stock is listed on the regulated market of Euronext Paris. The French government holds just over one-fifth of FDJ’s shares. The company’s 3,100 employees generated an annual revenue of 2.46 billion euros and an EBIT of 427.8 million euros in 2022.

Details of the Takeover Offer FDJ is offering Kindred shareholders 130 Swedish kronor (SEK) in cash for each share. This offer includes a takeover premium of 24% based on the closing price of the stock on January 19, 2024, the last trading day before the announcement of the takeover offer.

FDJ will finance the acquisition largely through its cash reserves and the rest through a bridge loan from leading French banks.

Overall, the takeover offer values Kindred at an enterprise value of 2.6 billion euros. Five major shareholders of Kindred, holding a total of 27.9% of the capital, have irrevocably committed to supporting the transaction and tendering their shares. FDJ has set a takeover threshold of at least 90% of the capital.

Through the acquisition of its competitor, FDJ aims to expand its portfolio, particularly in the area of online sports betting and games. „The combination of both companies will lead to a stronger strategic positioning and significant value creation for the benefit of our shareholders and wider stakeholders,“ said Stéphane Pallez, chairman and CEO of FDJ Group.

Market Reaction As mentioned, the share prices of both companies saw significant gains on the previous trading day. The Kindred stock jumped 16.7% to 121.90 SEK on the Stockholm Stock Exchange, just below the takeover offer. Investors apparently believe that the deal will go smoothly.

The FDJ stock also saw significant gains yesterday, rising 6.2% to 36.50 euros on the Paris Stock Exchange. Such positive price development is rather unusual for an acquiring company. FDJ investors are clearly more than convinced of the acquisition.

What’s Next The takeover offer will officially be launched on February 19, 2024, for a period of up to nine months. If the takeover threshold of 90% of the issued capital is reached during this period, only the usual conditions need to be met and approvals from the relevant regulatory authorities need to be obtained for the transaction to be completed.

The acquisition is expected to be completed by the end of this year.