An important year for the UK gambling industry is coming to a close. A year that saw six of the local market’s leaders tie-up in multi-billion merger and acquisition deals, the beginning of what could grow into a massive crackdown on fixed-odds betting terminals, and online gambling cement its position as the leading industry sector.
Stiff regulations, new tax regimes, technological innovation, increased costs, and ever-growing competition have necessitated unprecedented merger and acquisition activity over the past several years. With the Government gearing up for a new clampdown on the industry, it is believed that a new wave of consolidation will be unleashed in 2017.
The most popular M&A stories of 2016 understandably included the finalised tie-ups between Paddy Power and Betfair, and Ladbrokes and Coral, as well as the completion of GVC Holdings’ acquisition of fellow operator bwin.party. However, merger and acquisition activity was not limited to the aforementioned three deals. Here is a more comprehensive overview of the consolidation that occurred within the UK gambling industry this past year.
Ladbrokes-Coral/Paddy Power-Betfair/GVC Holdings-bwin.party
The three pairs of leading gambling companies announced their plans to combine their operations in the summer of 2015. In February of this year, GVC Holdings acquired bwin.party for a purchase price of £1.12 million, and Paddy Power and Betfair formed a gambling behemoth, whose market cap currently stands at around £7.4 billion.
The Ladbrokes-Coral merger faced certain delays as the Competition and Markets Authority required that the two gambling operators sell a number of betting shops around the UK. The deal was eventually closed on 1 November after Ladbrokes and Coral had disposed of 360 retail facilities.
NYX Gaming Group-OpenBet
Canada-listed developer and supplier of content and services for the gambling industry NYX Gaming acquired its London-headquartered counterpart for a total consideration of £270 million. Prior to the acquisition, NYX Gaming had not offered sports betting solutions to its clients. Thus, OpenBet complemented and completed its new owner’s portfolio through its leading offering. For years, the company has been supplying some of the world’s leading bookmakers with its sports betting products.
It is also interesting to note that the deal was partially funded by some such operators. Online gambling operator Sky Betting & Gaming contributed £20 million and William Hill spent £80 million to back the deal. The two companies have pointed out that they would have no involvement in OpenBet’s management.
Inspired Entertainment Inc.-Inspired Gaming Group
It was announced in mid-July that Virtual Sports content supplier Inspired Gaming Group would be acquired by Hydra Industries Acquisition Corp., a company formed to effect merger and acquisition deals, among other services. The latter was later on rebranded as Inspired Entertainment Inc. The deal was completed in December. Inspired Entertainment paid the total amount of £200 million for the leading gambling provider.
Playtech’s Shopping Spree
Playtech, the Isle of Man-based omni-channel gambling provider, was particularly active on the M&A front this year. The company acquired four entities, three of which with operations in the gambling industry and one in the finance industry. All deals came as part of Playtech’s strategy to secure growth through strategic acquisitions and to boost both its Financials and Gaming divisions.
The internationally recognized provider first added Swedish slots developer Quickspin to its portfolio with a €50-million acquisition deal. Next came German supplier of self-service betting terminals Best Gaming Gaming Technology. Playtech paid €138 million for said company. ECM Systems, a provider of bingo solutions, was later on acquired for £14.9 million.
Finally, Playtech announced the purchase of a 70% stake in financial and Straight Through Processing brokerage firm Consolidated Financial Holdings A/S with the option to obtain the remaining 30% in 2019.
William Hill’s Merger and Acquisition Activity
In late July, The Rank Group, a company with multi-channel presence in the UK, Belgium, and Spain, and online gambling operator 888 Holdings announced their interest to buy rival William Hill. Two offers were made to the latter. The first valued the leading UK bookmaker at 339 pence per share but William Hill’s Board rejected it quickly as it was believed to be one that undervalued the company. A second bid arrived shortly after, that one estimating the operator’s value at 352 pence per share. William Hill rejected that one, too. The company’s Board said that it did not want to engage in an endeavour that seemed too risky to be considered.
During the summer of 2016, William Hill also entered merger talks with PokerStars and Full Tilt Poker owner Amaya Inc. If a deal had been reached, it would have resulted in the creation of a £5-billion-plus gambling giant with presence in multiple jurisdictions and a leading position in the online poker segment. However, the potential combination was criticised fiercely by major William Hill shareholders and the company eventually abandoned talks with Amaya.
- Author
Daniel Williams
