The news that FDJ is set to table an offer for Kindred provided the gambling industry with ‘an abrupt wakeup’ on Monday morning.
It’s a move that comes amidst Kindred’s wider corporate transformation after what has been a challenging period in terms of growth.
Speaking on the latest edition of the iGaming Daily podcast, SBC Content Director, Ted Menmuir, emphasised a sale has been on the agenda for some Kindred stakeholders.
“Kindred had been kind of eyeing a potential sale by its investors, and the bid that FDJ has tabled is its biggest offer,” he said.
“We’re now three years following from its Paris EuroNext IPO, in which FDJ finally… divested itself from the French state and became an independent operator at a time when we are looking at a changed makeup for European gambling, in which you’ve got a deep pocketed French PLC, looking for active opportunities in the market to go and acquire.
“There’s a new player in town, there’s a new PLC – it’s a real statement. Through the acquisition it’s looking to become the second biggest gambling group once it acquires Kindred and that will have a ripple effect on pretty much all Western markets and also shake up the competitive landscape of the European gambling pool.”
Ted Orme-Clay added that he thinks an acquisition for Kindred has been on the cards for a significant period of time.
Menmuir followed by expressing his surprise the move came so early in the year, with the caveat that he feels city analysts will have been monitoring the movements of the FDJ in anticipation for an act like this one.
Both panellists emphasised that you have to analyse the wider market to gain a deeper understanding of what the future looks like for European gambling at large.
“You do have to look at the other giants,” Menmuir added “Flutter being one of them, they’re now going to go and kind of have a dual listing in NYC. Now, that doesn’t mean that they’re going to concentrate less on Europe and focus more on the US. But I think the makeup of gambling at the PLC level across Europe is changing. Now, one of the things that was outlined.”
He added: “I think we should revise Kindred’s last two years. I think about six months ago, Anders Storm, who was the founder of Kindred, wrote in the Swedish Express and one of the things he stated was that Kindred had almost reached peak points across key markets and it was burning a lot of cash out in the US.
“However, his concern was that Kindred was a big operator, but couldn’t even compete at that level against your Flutters and Entains. And he couldn’t keep up with that burning of cash just to enter new markets. I think that is a realisation across a lot of gambling PLCs, the actual cost of play and what we’ve seen over the last five years primarily, where these gambling PLCs
“When they go to market, they have to secure podium places straight away. Or else it’s a failure of strategy. And I think the leadership and the governance of PLCs are very aware of what’s at stake.
“What we’ve seen in the last two years on Kindred results is that across markets, across their key markets, they’ve reached saturation in those markets such as Sweden, Holland, and how much kind of growth can they eke out? It’s going to be a point of interest for me. How do they go to market and what is a fresh market for Kindred now? How do they revitalise Kindred brands across, you know, Sweden, Germany, Sweden, Belgium, and the Netherlands?”
Further looking at how the move could evolve the European gambling market, Menmuir emphasised the significant amount of resources Kindred would have under the FDJ umbrella, and how the group could elevate its already notable presence in multiple key markets.
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