When the takeover is complete, Stars Group will become the world’s biggest publicly listed online gambling company.
Why Is Stars Group Acquiring Sky Bet?
The Stars Group has done a good job of transitioning to the online casino and sports betting industries. They earned $1.3 billion in 2017 revenue and are headed in the right direction.
Nevertheless, the Canadian company is still overly reliant on poker (i.e. PokerStars), given that $877 million of their revenue comes from it. Furthermore, internet poker offers lower profit margins than casino and sportsbook products.
Sky Bet isn’t as large as Stars Group, considering that they generate $400 million in annual revenue. However, the British gaming company does have a strong following in the casino (Sky Casino) and betting (Sky Bet) departments.
The Stars Group notes:
“[Sky Bet] dramatically improves The Stars Group’s revenue diversity, creating a balanced spread across poker, casino and sportsbook with a broad geographic reach.”
Still Details to Finish Before the Deal is Complete
The Stars Group still needs to finish paying Sky plc and GVC Capital Partners $4.7 billion to complete the deal. $3.6 million of this amount will be in cash, while the remainder will consist of shares in The Stars Group.
Debt financing is the main source of the $3.6 million cash. This includes unsecured notes, a revolving credit arrangement, and loans.
The deal will also see Sky Bet CEO Richard Flint move to an executive chair position, while former CFO Ian Proctor will move to the CEO position.
Flint seems to be fine with the move, stating the following:
“I am confident that the new management structure, which includes an operational board for SBG, will allow us to maintain our unique culture that has delivered success over the years and continue delivering market share gains in the UK online betting and gaming market, building on our position as the UK’s most popular online betting brand.”