Good morning. On today’s agenda we have an M&A extra looking at yesterday evening’s announcement from Entain that it was buying Poland’s number-one bookmaker STS.

• Also, yesterday’s Deal Talk discussing the potential for M&A in the gambling regtech sector was prescient as OpenBet announced it has bought RG service provider Neccton.

• Reports suggest a consortium is being pulled together to buy IGT’s slots manufacturing business.

• And finally, 888 completes the sale of its Latvian business to Paf.

See, Cee Cee Rider, I said see, what you have done now.

STS buyout

The deal to buy a controlling stake in STS has been done via the Entain CEE vehicle set up last year in tandem with EMMA Capital.

On pole: Entain and its eastern European JV partner have snapped up Poland’s number-one bookmaker in a deal worth £750m, which gives Entain CEE a podium operator in a key European market.

• The deal will see Entain CEE buy 100% of the Warsaw-listed STS with Entain and EMMA Capital stumping up the fee on a 75/25 proportional basis.

• The equity price of PLN24.80 ($5.95) per share comes at a premium of 35% to the average share price in the six months to June. The enterprise value of the business is £690m.

It’s a family affair: STS is the market leader in the partially restricted Polish market, generating PLN662m of NGR in 2022 and adj. EBITDA of PLN273m. Its NGR CAGR since 2020 stands at 24% while adj. EBITDA CAGR for the same period is 34%.

• Entain said the acquisition would be earnings accretive in the first full year of ownership and would generate £10m of cost synergies.

• STS is 70% controlled by CEO Mateusz Juroszek and his father Zbigniew Juroszek.

• Mateusz Juroszek will remain as CEO and will join the Entain CEE board. The pair will reinvest some of the proceeds from the sale for a 10% stake in Entain CEE.

Say what you CEE: The Entain CEE JV was formed last summer when Entain bought a 75% stake in the EMMA Capital-owned SuperSport for €600m.

• The strategy stated at the time was to use it as a vehicle for expansion in the central and eastern European region.

Raise: This morning, Entain confirmed it has raised £600m via a share placement and retail offer, with Merrill Lynch and Morgan Stanely acting as underwriters. The placing was priced at £12.30, a 6.9% discount to yesterday's closing share price, and represents 8.3% of Entain’s shares.

• Of the proceeds, £450m will go towards Entain’s share of the STS buyout and £150m will be kept aside for further potential M&A activity.

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Polish your credentials

Heroes and villains: Analysts at Regulus noted STS was “easily” the leading Polish bookmaker with ~36% share or ~45% share when the online gaming offering of the national lottery is excluded from the figures. It also has a 400 outlet-strong retail presence.

• “It is a proven local hero,” they added. “The market retains attractive growth characteristics, especially given the strength of the Polish economy and the existing strict fiscal-regulatory environment.”

• Noting the deal was “not cheap”, they suggested it was a fair price for a “very strong market position”, which as a global operator Entain can leverage.

• Nevertheless, the team at Jefferies said they believed there might be some pushback from Entain shareholders on the “upper-end” valuation multiple, limited cost savings, a complicated deal structure and the use of an equity placement to fund the deal.

• The team at Peel Hunt was more positive, saying Entain was “right to pay up to achieve market leadership, acquiring both growth and diversification”.

Add to basket: Regulus said they believed the acquisition was a “high-quality, low-risk deal at a win-win price”. With leading positions now in Croatia and Poland, the team added it was “not difficult to imagine a shopping list” elsewhere in the CEE region.

• However, Poland and Croatia are “visible jurisdictions”, they noted. 

• “The rest of the region tends to be rather more complex in terms of either scale, visibility or accessibility.”

Neccton buyout

OpenBet has bought the AML and responsible gaming service provider for an undisclosed sum.

Regtech momentum: Endeavor’s sports-betting platform provider OpenBet has bought the Germany-based Neccton, with OpenBet CEO Jordan Levin saying the deal was hugely complementary.

• Mystic reg: Just yesterday, E+M’s Deal Talk suggested there was likely to be more M&A activity in the gambling regtech space following GeoComply’s deal to buy OneComply.

• Led by Michael Auer and Andreas Schneeberger, Neccton’s AI-based solution analyzes player behavior in real time and reduces the cost of AML, fraud detection and RG activities.

• Data claim: Levin said that in 2022 the sector doled out $250m in fines related to RG, AML and compliance failures.   

IGT consortium

Reports suggest ‘casino icon’ Gary Green is putting together a consortium of investors to buy the IGT slots business.

Go green: According to a Yahoo-published press release, Green is pulling together a disparate group of unnamed tribes and Chinese investors to fund an acquisition of the IGT games business. This follows the news last week that IGT is undergoing a strategic review with the sale of its gaming and digital businesses on the table.

• In a statement to the news organization, Green said he had “several possibilities” that might appeal to IGT shareholders and would “win the endorsement” of its advisers.

• He added he has asked for a meeting with IGT executive chair Marco Sala.

• Green is the new orange: Green is a former VP of Trump Hotels & Casinos and said he had a “long history of being tangentially part of the IGT family”. 

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888 sale

Done and dusted: 888 has completed the sale of its Latvian business to Paf Consulting for €28m. Chair Lord Mendelsohn said it marked “another positive step” in the execution of its integration programme. 

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