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Done Deals
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A ?urry of activity involving some
of the industry’s biggest names could just be the start of larger scale consolidation in months ahead. Tom Washington reports
T
he speed at which regulation and technology are progressing within the industry, coupled with the relatively high amounts of net cash held by operators, means M&A activity is inevitable. But while gaming is maturing and consolidation expected – mirroring the offline industry now dominated by a handful of operators – it is by no means easy to predict the deals that will shape the market for years to come. A ?urry of activity at the end of last and turn of this year has seen two of Europe’s largest bookmakers, Ladbrokes and William Hill, move to diversify through investments – one geographically, the other in products – while Gamesys acquired Virgin Games and signed a long-term deal to develop real-money and social gaming propositions globally under the Virgin brand. For many operators one catalyst looming on the horizon is the proposed point of consumption tax due in 2014. Whether this remains at the current rate of 15% on UK gaming pro?ts or is eventually reduced, as many predict, it will nevertheless negatively impact operators’ bottom lines, meaning many will seek to further leverage economies of scale and rely more heavily on earnings in other regulated jurisdictions. This diversi?cation away from the core UK market will no doubt see some larger operators shopping for successful local brands, while logic and necessity will surely see those at the other end of the
scale merge in order to drive down costs and remain competitive in a fully taxed environment. Going global In a deal that was ?rst announced in September 2012 and ?nalised just before Christmas, William Hill teamed up with GVC Holdings to bid for and agree a £454m deal to acquire online operator Sportingbet. The deal will see Hills assume control of Sportingbet’s businesses in the fast-growing Australian market where positive regulatory change is likely, and newlyregulated Spain, while GVC will exchange stock for Sportingbet’s assets in a number of unregulated markets such as Greece and Latin America. The move by Hills represents a reaction to the need to broaden its online business and “global brand”, while also conceding that building from scratch in a country such as Australia, where a handful of operators dominate the pro?table sports betting market, would be expensive, time consuming and risky. The acquisition of Sportingbet, owner of standalone Australian bookmaker Centrebet, will immediately solve these problems. Founded in 1997 by Mark Blandford, Sportingbet has long been seen as an attractive acquisition
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