(AOF) – La Française des jeux (FDJ, +5.30% to 36.18 euros) is among the largest increases in the SBF120 after the announcement of the launch of a public purchase offer for the Swedish operator of Kindred online games, for an amount of 2.6 billion euros. Kindred, which owns Unibet, is “a leading player in the sector” in Europe”, and this merger will give birth to a “European champion”. Stifel remains a buy on the value with a price target of 38 euros , welcoming a “key step” in the “international development” of the group.
“The new entity will be the second operator in the gambling sector in Europe,” announces FDJ. The group underlines that “creating value for FDJ shareholders”, the operation “should in particular result in an accretive effect greater than 10% on the dividend per share, from that paid for the 2025 financial year”.
Accretive impact on Ebitda margin
In the 2023 financial year, Kindred achieved a turnover (after gaming taxes) of £893 million and recorded an Ebitda of £205 million, a margin of 23%.
FDJ specifies that this merger will allow “the acceleration of growth in activity and free cash flow”. It will have an accretive effect on the current Ebitda margin, beyond the objective targeted by FDJ pre-acquisition of a rate of at least 25% in 2025. It will also allow a “significant increase in earnings per share of the group”.
The French group will finance “this acquisition by mobilizing a large part of its liquidity and via a bridging loan from leading French banks”. The group has confirmed its medium-term objective of a net financial debt to current Ebitda ratio of less than or equal to 2.
“Unanimously recommended” by the Kindred board of directors, the buyout benefits from the “irrevocable” commitment of five shareholders, together holding 27.9% of the capital, to contribute their shares
The French group’s offer, which concerns the entire capital of Kindred, “is made at the price of 130 Swedish crowns per share of Kindred, listed on the Nasdaq in Stockholm”, a price “which represents a premium of 24% over the closing price on January 19 and corresponds to an enterprise value of 2.6 billion euros for Kindred. It will be opened on February 19, “for a period of nine months maximum”. The completion of the takeover bid will remain subject to the acquisition by FDJ of at least 90% of the capital of Kindred.
“Due to their respective histories, their strategic assets and their values, FDJ and Kindred present a strong complementarity,” judges FDJ CEO Stéphane Pallez.
Stifel highlights that this acquisition will not only allow FDJ to increase its market share in France, with Unibet currently holding 10-15% of global gross gaming revenue, but will also allow it to expand across the country. international in sports betting, online casino, online bingo and online poker, constituting one of the largest online gaming operators in Europe.
The broker underlines that the price paid reflects an enterprise value to Ebitda ratio of around 11 for Kindred, “in line” with that of FDJ’s latest acquisition, the Irish PLI (10), bought in November 2023.
A solid performance in the fourth quarter
On the results side, the FDJ also announced this Monday a total turnover of 747 million euros between October and December, up 13.8% compared to the third quarter. Over the entire 2023 financial year, the operator’s overall turnover stood at 2.621 billion euros, an increase of 6.5%.
“All activities recorded good performance,” assures the FDJ. Its lottery shows a turnover of 531 million euros, an increase of 7.8% and sports betting and online games “confirm their good dynamic”, with a turnover of 159 million euros, in increase of 14.9%.
The group will communicate its 2023 results on Thursday February 15, 2024 before market trading.
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