La Française des Jeux (FDJ) has recently announced its strategic plan to acquire Kindred Group, a prominent European gaming company recognized for its Unibet brand. This all-cash tender offer, valued at SEK 130 ($12.43) per share on Nasdaq Stockholm, reflects a 24% premium over the closing price as of January 19, 2024. The move is in line with FDJ’s broader strategy to diversify its portfolio and strengthen its presence in both monopoly and competitive gaming markets.
Strategic Rationale and Vision:
Launched by FDJ Chairwoman and CEO Stéphane Pallez, the acquisition of Kindred is seen as a pivotal step towards achieving a diversified and balanced profile. This strategic move is rooted in multiple pillars, including FDJ’s monopoly activities in the French and Irish lottery markets, as well as its foray into the competitive landscape of online sports betting and gaming in Europe.
Financial Snapshot:
Kindred, home to renowned brands like Unibet and 32Red, reported a substantial £893 million ($1.1 billion) in revenue in 2023. The proposed acquisition is expected to elevate FDJ’s international presence, constituting approximately 20% of its gross gaming revenue (GGR), a significant increase from the current 6%. This expansion follows FDJ’s successful acquisition of Premier Lotteries Ireland in November 2023, a €380 million deal aimed at fortifying FDJ’s position as a global lottery and online gaming operator.
Operational Integration and Synergies:
The collaboration between FDJ and Kindred is poised to create operational synergies, fostering value creation within the combined group. FDJ’s proven track record in the lottery sector, coupled with Kindred’s expertise in online gaming, is expected to yield a powerful and diversified gaming entity with increased market competitiveness.
Shareholder Support and Commitment:
The proposed acquisition has received backing from Kindred’s Board of Directors, with key shareholders representing 27.9% of the capital already committing to tender their shares. This significant support underscores the strategic alignment and shared vision between FDJ and Kindred.
Financial Structuring and Commitment to Stability:
FDJ intends to finance the acquisition through available cash and a bridge loan from French banks. The company emphasizes its commitment to maintaining a mid-term net debt to recurring EBITDA ratio of ≤2x, ensuring financial stability throughout this transformative phase.
Anticipated Timeline and Regulatory Considerations:
The transaction is scheduled to commence on February 19, 2024, subject to regulatory approvals and FDJ acquiring at least 90% of Kindred’s capital. A meticulous approach to compliance and regulatory considerations highlights FDJ’s commitment to a seamless integration process.
Value Creation and Dividend Projection:
The combined group anticipates significant value creation, with a projected more than 10% accretion in dividend per share starting from the 2025 financial year. Shareholders can expect to see the fruition of these projections in dividends to be paid out in 2026.
FDJ’s bold move to acquire Kindred Group represents a strategic evolution for the company, positioning it as a formidable player in both monopoly and competitive gaming markets. With a focus on diversification, international expansion, and operational synergy, the proposed acquisition aligns with the broader trends in the evolving landscape of the gaming industry. As FDJ and Kindred join forces, the combined entity is poised to redefine the gaming landscape and deliver enhanced value to shareholders.