FDJ, the French lottery and gaming company, has made a significant acquisition offer for Kindred Group, as reported by the Wall Street Journal over the weekend.
On January 21, Kindred officially confirmed this takeover bid, and on January 22, both Kindred and FDJ released further details.
FDJ has proposed a cash offer of SEK130 for each Swedish Depository Receipt (SDR) of Kindred.
This represents a substantial 24.4% premium compared to the SEK104.50 closing price of Kindred shares on January 19, just before the offer became public.
Additionally, Kindred calculated that this offer values the proposal at 10.9 times its 2023 underlying EBITDA.
Kindred’s board has unanimously recommended that its shareholders accept this offer.
The acceptance period is scheduled to commence around February 20 and conclude on November 19. Five major Kindred shareholders, who together hold 27.9% of all shares, have already pledged their support for the acquisition.
These investors include Corvex Management, Premier Investissement, Eminence Capital, Veralda Investment, and Nordea.
However, it’s important to note that the deal is contingent on several conditions, including 90% of Kindred shareholders accepting the offer, regulatory approvals, and the absence of any superior counter-proposals from other parties.
FDJ sees this acquisition as an opportunity to create the second-largest operator in the European gaming sector, leading to increased revenue and earnings growth.
The purchase is also expected to provide more than a 10% increase in dividend per share for FDJ shareholders starting from the 2025 financial year.
Both Kindred and FDJ’s boards support this acquisition. FDJ CEO Stéphane Pallez stated that this move aligns with their strategic goals and diversifies their profile, combining their monopoly activities in France and Ireland with Kindred’s online sports betting and gaming expertise.
Nils Andén, CEO of Kindred, expressed his excitement about the potential for growth and synergy between the two companies.
He believes that this partnership will accelerate strategic projects, expand their presence in core markets, and provide entertainment to customers while focusing on responsible gaming.
This acquisition offer comes after Kindred explored potential sales in 2022 and initiated a strategic review in April 2023.
Despite the proposal from FDJ, the strategic review remains ongoing.
Kindred is also set to exit the North American market by Q2 2024, reallocating resources to key markets and undergoing a restructuring with layoffs.
FDJ has been actively expanding, with recent acquisitions like the Irish National Lottery and horse race betting operator ZeTurf.
The company reported impressive revenue of €1.88 billion in the first nine months of 2023, with significant growth in sports betting and iGaming contributions.
Acquiring Kindred would further extend their geographic reach and offer access to a proprietary sports betting platform.