Zeal Network has rejected the offer made today by Lottoland to purchase Zeal’s German business for €60m to €76m, labelling the bid “significantly inadequate”.

In statement released this afternoon, Zeal said the deal would strip the company of “its most valuable asset and the basis for future brokerage growth in Germany, while leaving Zeal and its shareholders with considerable downside risks”.

Dr Helmut Becker, CEO of Zeal, commented: ‘The indicative offer from Lottoland is an attempt to buy our core German assets on the cheap. It does not reflect the value of our German business. At the same time, a sale of our core business would leave Zeal and its shareholders with all downside risks from pending VAT litigation in Germany and with significant costs from restructuring the rest of the business.

“Our plan to convert Tipp24 into a brokerage business and to combine it with Lotto24 will create a strong platform for future growth and is far superior to the Lottoland proposal.

“The positive preliminary results announced today by Lotto24 further emphasise the attractiveness of the brokerage business model. Lottoland’s offer therefore confirms our view that their main intention is to disrupt the Lotto24 transaction, driven by their business interests as a competitor,” said Becker.

Zeal said its Executive Board had reviewed the offer and rejected it as significantly inadequate. “Even at the high end of the implied price range indicated by Lottoland, the offer neglects the fundamental value of the German core business of Zeal.

“The German business of Tipp24 contributes by far the largest part of Zeal’s revenues and earnings. At the same time, its client base and brand represent the key part of the growth platform for the future German lottery brokerage business, following the planned transformation of Zeal’s current German secondary lottery business into a locally licensed online brokerage model and the agreed combination with Lotto24.

“A sale of the Tipp24 business would therefore strip Zeal of its most valuable asset, i.e. the entire customer base in Germany and the brand, and therefore of its potential for future growth in Germany.”

The company said that, in light of this assessment, the general meeting scheduled for January 18 will not be postponed.