Documents have been published by Entain revealing a proposal to bookbuild £600m in new capital, which will primarily be used to acquire 100 per cent of Poland’s largest operator STS Group.
Shares of the gambling group will be offered to institutional investors through an accelerated bookbuild process, while a separate retail offer to common market investors will be hosted on the PrimaryBid platform.
The Entain CEE unit will carry out the STS acquisition in partnership with private equity fund EMMA Capital, which will fund 25 per cent of the offer.
An offer to acquire STS in its entirety has been priced by Entain CEE at PLN 24.80 (£4.73) per share, representing a significant premium of 35 per cent to the six-month volume-weighted average price.
The offer also includes a 28 per cent premium to the three-month volume weighted average price and a 20 per cent premium to the spot price as of 12 June 2023 – a premium that values STS Group at circa £750m.
It was also noted the STS acquisition provides Entain with the opportunity to acquire “an attractive asset in a high-growth regulated market within CEE”.
Jette Nygaard-Anderson, CEO of Entain, commented: “We are delighted to be acquiring the leading sports-betting operator in Poland, which is a hugely exciting and fast-growing market. STS is an exceptional business with a great brand, a compelling omnichannel offering, and an outstanding CEO and management team.
“The transaction is perfectly aligned with our Entain CEE strategy and our wider M&A strategy of acquiring high-quality businesses with leading positions in attractive, growing and regulated markets. Expansion across Central and Eastern Europe remains a core component of our growth plans, and STS will be an integral part of our platform in that region.”
The Juroszek Family – CEO Mateusz Juroszek and his father Zbigniew Juroszek, who collectively own a 70 per cent shareholding in STS – have entered into a binding agreement and accepted an offer. Mateusz will continue to lead STS while also joining the board of Entain CEE.
“We could not have found a better partner to help us take STS into the next phase of its growth, and it is clear that Entain shares our ambition and vision for its future. I look forward to continuing to lead and grow STS, and to working in close collaboration with the Entain CEE team,” noted Mateusz Juroszek
Founded last summer following the £690m purchase of Croatia’s SuperSport, Entain CEE is a formed partnership between Entain and EMMA Capital. Entain holds a 75 per cent stake in the organisation, which will be led by Radim Haluza.
The acquisition is forecasted to be earnings effective from “the first complete year of ownership” as STS has documented a strong financial performance of +24 per cent NGR since 2020.
Alongside anticipated synergies coming to over £10m in terms of run-rate, the acquisition is expected to contribute positively to earnings from the first year of ownership.
Before commencing the bookbuild, Entain cites that all major shareholders have expressed support for the placing and acquisition of STS. However, the group will use the funds from the equity raise for its broader strategy if the acquisition does not proceed.
The joint bookrunners, Bank of America Securities and Morgan Stanley, along with co-manager Santander, will oversee the equity raise, and the Placing Shares and Retail Offer Shares will have the same rights as existing ordinary shares of Entain.