The Stars Group announced over the weekend that it has acquired Sky Betting & Gaming (SBG) for $4.7 billion in combination cash and stock deal. According to The Stars Group in a press release, the addition of Sky will make the company the largest publicly traded online gambling company.
The Stars Group is clearly best known as an online poker company, as its name comes from its ownership of PokerStars, the world’s largest online poker room, but this purchase balances the company’s numbers quite nicely. The Stars Group says that if Sky, CrownBet and William Hill Australia (the latter two of which were also recently acquired) were counted in the 2017 financials, poker would make up just 37 percent of The Stars Group’s revenue. An almost equal number – 34 percent – would have come from sportsbook, while 26 percent would have been casino.
“The acquisition of Sky Betting & Gaming is a landmark moment in The Stars Group’s history,” said Rafi Ashkenazi, TSG’s Chief Executive Officer, in the press release. “SBG operates one of the world’s fastest growing sportsbooks and is one of the United Kingdom’s leading gaming providers. SBG’s premier sports betting product is the ideal complement to our industry-leading poker platform. The ability to offer two low-cost acquisition channels of this magnitude provides The Stars Group with great growth potential and will significantly increase our ability to create winning moments for our customers.”
“We are delighted to join forces with The Stars Group,” added Richard Flint, Sky Betting & Gaming’s Chief Executive Officer. “We have had a fantastic last few years and would like to thank CVC and Sky for supporting us in becoming a leading online operator in the UK. This transaction allows us to offer our best-in-class products to a truly global audience. We’re excited about our future together.”
The Stars Group outlined the benefits of the acquisition, the first of which we have touched upon:
• Greater revenue diversification and significantly enhanced exposure to sports betting, the world’s largest and fastest growing online gaming segment, as the majority of SBG’s revenues are generated by sports betting.
• An increased presence in regulated markets, particularly within the United Kingdom, the world’s largest regulated online gaming market.
• The development of sports betting as a second low-cost customer acquisition channel, complementing The Stars Group’s core poker business and enabling more effective cross-sell to players across multiple verticals.
• Improved products and technology as a result of the addition of SBG’s innovative casino and sports book offerings, and portfolio of popular mobile apps.
• Identified cost synergies of at least $70 million per year.
The Stars Group will pay CVC Capital Partners and Sky plc, the owners of Sky Betting & Gaming, $3.6 billion in cash. To make up the other $1.1 billion, The Stars Group will pay with 37.9 million newly issued common shares. The value is based on the closing price of The Stars Group stock (NASDAQ: TSG) on April 20th, which was $29.30.
The transaction is expected to close in the third quarter of this year and has been unanimously approved by TSG’s Board of Directors.