The Stars Group To Buy Sky Bet for $4.7 BillionApril 24, 2018 12:03 pm
Last weekend, The Stars Group (TSG) announced its intention to acquire Sky Betting & Gaming (SBG) for $4.7 billion, with the deal now awaiting approval from regulatory bodies associated with stock exchanges such as the Nasdaq (USA) and Toronto Stock Exchange (Canada) before being finalized.
The Stars Group already runs the world’s biggest online poker site, PokerStars, while Sky Betting & Gaming owns the online sports betting company Sky Bet, with the deal resulting in the “world’s largest publicly listed online gaming company” once the transaction is completed in the third quarter of 2018.
Sky Bet is one of the UK’s biggest online sports betting brands, and in recent years has expanded in popularity to overtake other major competitors such as William Hill and Ladbrokes. Helping it to achieve such a prominent presence in the online sports betting space is its mobile-betting operation which currently accounts for 80% of its revenue.
In 2017, Sky reported £624 million in annual revenue, representing an impressive growth rate of 46% over the last two years, with some of its income derived from the sports broadcasting and media side of the company, which is the largest in Europe. This will then provide PokerStars with further opportunities to enhance its own product, brand recognition and customer relationships within regulated markets, and especially the UK, with overall synergy cost savings estimated to be worth around $70 million per year.
Financial and Operational Benefits
The Stars Group has highlighted a number of different benefits that will result from the deal, and help it to become the “world’s favorite iGaming destination”. Summing up some of the main advantages involved, Rafi Ashkenazi, The Stars Group’s Chief Executive Officer, stated:
“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.”
Likewise, Richard Flint, Sky Betting & Gaming’s Chief Executive Officer, said that his company was delighted to partner with The Stars Group, and that the deal would enable it to offer its “best-in-class products” to a truly worldwide audience.
TSG’s Expanding Sports Operation
PokerStars started out as a poker site dedicated to offering just poker products, and still controls around two-thirds of the global market. In 2014, it then expanded its operation by introducing online casinos, with sports betting added to its gambling mix the following year. Since then, PokerStars has been increasing its presence in the lucrative sports betting market further, and last month it acquired William Hill Australia and a 62% stake in CrownBet, with the latter representing Australia’s most popular internet sports betting brands.
As a result, The Star Group has now grown into a truly diverse online gambling company, with its revenue in 2017 divided fairly evenly between poker (37%), sportsbook (34%) and casino (26%).
Share Price Surge
Following announcement of the deal, Stars Group shares soared by 10 percent to C$41 in early trading on the Toronto Stock Exchange, marking its highest point since the firm first went public back in 2010. As of today (April 26th), the shares have risen further to C$43, given the gambling company a market value in excess of C$6.39 billion, and commenting upon its prospects going forwards, Rafi Ashkenazi stated that The Stars Group is now in a position to capture a significant market share in all of the newly regulated markets, including the USA. Ashkenazi noted, however, that the US was not the trigger for the deal.