From 62 percent to 80 percent
The Stars Group (TSG) has increased its share in CrownBet from 62 percent to 80 percent shortly after announcing its initial share acquisition and is behind a definitive agreement in which CrownBet has acquired William Hill Australia Holdings Pty Ltd (see previous InfoPowa report).
The aggregate purchase price for both transactions is approximately $315 million, of which $234 million will be payable in cash for William Hill Australia and the remainder will be payable in approximately 3.1 million newly-issued common shares of TSG for the increased equity interest in CrownBet.
“These acquisitions will further increase our exposure to the attractive regulated Australian sportsbook market and create a player of scale and clear rival to the top two operators there,” Rafi Ashkenazi, Chief Executive Officer of The Stars Group, commented.
“With complementary geographic profiles, we expect the combined business to leverage CrownBet’s operating and proprietary technology platform and be well positioned for growth and to navigate the ongoing regulatory and taxation changes in the Australian market.”
“I am excited to partner with The Stars Group,” Matthew Tripp, Chief Executive Officer of CrownBet, added.
“We believe the acquisition of the William Hill Australia business gives us the scale and customers to become a leading force in the market and the tools we will need to prepare for potential positive regulatory movement in other jurisdictions.”
CrownBet’s management team, including Tripp, will operate the combined business in Australia, which The Stars Group currently estimates will realize gross cost synergies of approximately A$50 million per year beginning in 2019 after a period of incremental integration and rebranding costs.
TSG currently anticipates the transactions will be accretive at a combined valuation of approximately 12.1 times unaudited 2017 EBITDA of A$57.5 million before anticipated synergies.
The management team of CrownBet will be entitled to an additional payment of up to approximately $182 million in 2020 subject to certain performance conditions and payable in cash and/or additional common shares at The Stars Group’s discretion.
TSG will retain its right to appoint a majority of the directors on the board of directors of CrownBet.
The transactions are conditional on obtaining approval by the Northern Territory Racing Commission and the Australian Foreign Investment Review Board. In addition, TSG’s acquisition of the additional interest in CrownBet is conditional on the acquisition of William Hill Australia and approvals from the Toronto Stock Exchange.
