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State-backed French lottery operator Française des Jeux has struck a €2.6bn deal to buy Stockholm-listed gambling group Kindred in a takeover that will create one of Europe’s biggest betting companies.
Kindred’s board said on Monday that it “unanimously” recommended that shareholders accept FDJ’s all-cash offer for the operator of the Unibet and 32Red gambling brands, which valued its stock at SKr130 ($12.47) a share.
The acquisition will boost FDJ’s standing among online betting operators in its home market of France, where it has a monopoly on lottery services, as well as offering it an avenue to international expansion. International revenues will account for a fifth of FDJ’s business after the deal, up from just 6 per cent currently, on account of Kindred’s 1.5mn active customers largely based in western Europe and Scandinavia.
The takeover is the culmination of a lengthy sales process for Kindred, which kicked off in April last year shortly after the betting operator warned about a sharp decline in full-year revenues and profits for 2022. The fall was driven by its decision to withdraw from the Netherlands, one of its biggest markets.
Kindred had been under pressure from a host of activist investors on its shareholder register, including Corvex Management, its biggest shareholder with 15 per cent of the stock, and Eminence Capital, to push through a sale. Both Corvex, which is run by Carl Icahn protégé Keith Meister, and Eminence have also been leading a high-profile activist campaign against British gambling group Entain.
FDJ chair Stéphane Pallez said “the combination will result in a stronger strategic positioning” for the French lottery operator in sports betting. “In this market, Kindred is one of the leading operators, combining strong brands, best-in-class technology platforms, an attractive growth profile and a committed approach to responsible gaming,” she said.
Kindred, one of Europe’s top-five betting operators, is targeting earnings before interest, taxes, depreciation and amortisation of more than £250mn ($318mn) for its 2024 financial year, up from £205mn in 2023, when the group generated revenues after betting duties of £893mn.
“I believe that combining with FDJ, Kindred can accelerate the delivery of long-term strategic projects, continue to grow in core markets, and provide a trusted source of entertainment to customers,” said Kindred chief executive Nils Andén. “It will also speed up our path towards 100 per cent locally regulated revenue.”
The Gambling Commission, the UK’s gaming regulator, fined Kindred £7.1mn last year for failing to identify and protect potential problem gamblers using its 32Red poker site.
The French government sold down its stake in FDJ to 20 per cent when the group floated in 2019, saying that privatisation would help to rejuvenate the lottery operator. FDJ has been on an expansion drive in recent months, buying both Premier Lotteries Ireland for €350mn ($381mn) and horseracing betting site ZEturf for €175mn late last year.
