BOULOGNE-BILLANCOURT, France - FDJ, the French gaming operator, has announced an all-cash tender offer to acquire Kindred, a leading European online betting and gaming company known for the Unibet brand. The proposed acquisition is at SEK 130 per share, a 24% premium over Kindred's closing price on January 19, 2024, valuing the enterprise at approximately €2.6 billion.
This strategic move is expected to transform FDJ into a European gaming champion, significantly enhancing its financial profile and creating value for shareholders. The transaction is projected to result in more than a 10% increase in dividend per share for FDJ starting from the financial year 2025, to be paid out in 2026.
Kindred's Board of Directors has unanimously recommended the offer, with five key shareholders, holding a combined 27.9% of the capital, agreeing irrevocably to tender their shares. The transaction will be subject to regulatory approvals and is contingent upon FDJ acquiring at least 90% of Kindred's capital.
According to FDJ Chairwoman and CEO Stéphane Pallez, the acquisition aligns with FDJ's strategy, creating a diversified and balanced profile with a commitment to responsible gaming. Nils Andén, CEO of Kindred, also expressed optimism about the merger, emphasizing the benefits of combining with FDJ, including accelerated strategic projects and growth in core markets.
The offer will launch on February 19, 2024, and is set to run for a maximum of nine months. The acquisition will expand FDJ's international presence and increase the online share of its gross gaming revenue from 14% to 29%. The combined group will focus on markets that are either locally regulated or in the process of becoming regulated.
Kindred reported revenue (after betting duties) of £893 million and EBITDA of £205 million in 2023, with an EBITDA margin of 23%. The company aims for EBITDA in 2024 to exceed £250 million.
The tender offer has been structured to adhere to the usual conditions precedent for a Swedish market offer, and the deal's completion remains subject to obtaining the necessary regulatory authorizations. This report is based on a press release statement.
InvestingPro Insights
As FDJ positions itself to become a European gaming powerhouse with its proposed acquisition of Kindred, investors are keen to observe how the company's financial health will support this ambitious move. Notably, FDJ holds more cash than debt, providing a strong liquidity position to pursue such strategic initiatives. In addition, the company has demonstrated a commitment to shareholder returns, having raised its dividend for four consecutive years—a streak that is projected to continue with the promise of a 10% increase in dividend per share post-acquisition.
InvestingPro data underscores the company's robust financial standing, with a market capitalization of $7.14 billion and a healthy P/E ratio of 18.87, which slightly increases to 19.71 when adjusted for the last twelve months as of Q2 2023. Revenue growth has been steady, with a 6.35% increase over the last twelve months as of Q2 2023, indicating a solid operational performance. Moreover, the company's stock has experienced a strong return over the last three months, with a 15.15% price total return, reflecting investor confidence.
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