Entain has agreed to acquire a Dutch operator of online sports betting and gaming, BetEnt, trading as BetCity, from Sports Entertainment Media.
The deal will see Entain pay an initial €300 million in cash at completion, including a deferred contingent consideration of up to €500 million.
A balancing payment will be due by early 2023, based on BetCity’s real performance in the financial year of 2022, and a further contingent payment to be paid in early 2024, based on 10x BetCity’s EBITDA for the financial year 2023, less amounts already paid.
Finally, a last contingent payment work €50 million will be paid by Entain on the delivery of synergies and a successful migration to the company’s platform.
The consideration payable on current projections is around €450 million, and, depending on BetCity’s performance, the maximum consideration has been capped at €850 million. The combination is expected to deliver approximately €28 million of cost synergies, predominantly from technology, content and royalty benefits, by the end of 2026.
Entain, one of the world’s largest sports-betting and gaming groups, operating both online and in the retail sector, said that the initial consideration will be funded from existing cash resources and drawings on the group’s revolving credit facility, while the acquisition is expected to be completed during the second half of 2022.
BetCity is one of the Netherlands’ leading online sports betting and gaming operators. Headquartered in Amsterdam, BetCity received an online sports betting and gaming licence from the KSA (Kansspelautoriteit), the Dutch Gaming and Gambling Authority, in October 2021.
Entain stressed that the newly regulated Netherlands online market is highly attractive and fast-growing across both sports betting and gaming.
Since its licensing in October 2021, BetCity “has delivered rapid growth, establishing a leading position with approximately 20 per cent market share during the fourth quarter of 2021. This acquisition will create a strong market operator with significant growth opportunities, in line with the group’s strategy.”
BetCity’s offering is highly complementary to Entain’s bwin and Party brands which are awaiting approval for a licence to operate in the Netherlands – now expected during the latter part of this year as the KSA has recently requested additional documentation as part of the ongoing application process.
“The combination of BetCity’s local expertise, strong brand and large diverse user-base, with Entain’s global scale and market-leading platform will provide customers with a broader offering of engaging products, fresh content and new experiences.”
Commenting on the proposed acquisition, Jette Nygaard-Andersen, CEO at Entain, said:
“We are delighted that BetCity is joining Entain and are excited by the significant opportunities in the newly regulated Dutch market. This acquisition will provide customers with an even better experience as we combine BetCity’s local expertise and brand alongside Entain’s market leading, customer focused platform. This transaction further underpins our growth strategy of operating in attractive regulated markets. We look forward to working with Melvin and the BetCity team.”
On his part, Melvin Bosterlaar, CEO of BetCity who will be staying at the company following the acquisition, said:
“We are happy to be joining forces with a world-class group in Entain. Together we will be well-placed to maintain a strong market position in the Dutch market for the coming years. Entain’s market leading platform, technology, established brands and global scale provides a fantastic opportunity to expand and enrich our customer offering. Both BetCity and Entain position the customer at the heart of everything we do, with Entain’s core values and philosophy in responsible gaming, compliance and company-culture seamlessly aligning with those of BetCity. We look forward to a bright future together.”
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