France’s gaming company La Française des Jeux (FDJ) is making a €2.6 billion ($2.83 billion) takeover bid for the Swedish-based online gaming giant Kindred Group in a play that would reportedly make it the second-largest gaming company in Europe, Yogonet reported January 22.
FDJ offers lottery scratchers in France. The French state owns a 20 percent stake in the company. It has been on an expansion campaign recently that led to its winning bid to run the Irish National Lottery in November and acquisition of the horse betting site ZEturf in October, which made it one of the four top bookmakers in France. It reported revenue of €1.88bn for the first nine months of last year.
FDJ is offering 130 Swedish crowns ($12.43) a share, which translates into €2.6 billion ($2.83 billion), a 24.4 percent premium over Kindred’s January 19 closing price, reported Yogonet, the Wall Street Journal and multiple business news sites. That was the last date before the offer became public.
The bid is 10.9x the company’s 2023 underlying EBITDA, Kindred said.
FDJ claims the all-cash tender offer to acquire all of Kindred’s capital would create value for its shareholders, and lead to a more than 10 percent increase in share dividends over the next two years. It also declared its intention to create a “European gaming champion” with stronger revenue and earnings growth, iGaming Business reported.
Kindred’s board unanimously recommended taking the offer in a statement that it was the “most attractive outcome for shareholders.”
The statement added, “The Board believes that the terms of the offer recognize Kindred’s long-term growth prospects, taking into account the risks and uncertainties associated with the realization of those prospects.”
Five of Kindred’s largest shareholders, representing 27.9 percent, support the offer, including Corvex Management, Premier Investissement, Eminence Capital, Veralda Investment and Nordea.
The tender offer will be launched February 19 and will be open for a maximum of nine months, until November 19. It remains subject to regulatory approvals and to the approval of the acquisition by no less than 90 percent of Kindred’s shareholders and to no other party making a better offer.
Investors showed their approval by trading Kindred shares up 17 percent while FDJ’s stock climbed 3.9 percent after the announcement.
FDJ is only the latest of “several parties” that have shown interest in Kindred during the previous year, Kindred said in a separate statement. Kindred has been angling to be acquired for some time. In 2022 it contacted the following companies to gauge interest: Entain, 888, Tipico, Apollo Global and Blackstone—but without any result at the time.
Last April Kindred launched a review of strategic alternatives, with the possible goal of a merger, sale or partial sale of the business. The review will continue, despite the tender, Kindred said, according to iGaming Business: “[The] strategic review initiated by the board in April 2023 is ongoing and the company continues to evaluate options to deliver shareholder value.”
It added, “As part of the strategic review process, the board in conjunction with its advisers, has explored a number of options, including a merger or sale of the company.”
The review led to long-serving CEO Henrik Tjärnström and most of the company’s C-level employees—about 300 in all— leaving. As mentioned, the company also plans to exit the North American market by the end of this year and concentrate financial and technology on Europe.
As it now stands, Kindred is one of the top five gaming groups in Western Europe, with a presence in seven of the top EU markets.
FDJ Group Chairman and CEO Stéphane Pallez declared, “Given their respective histories, strategic strengths, and core values, FDJ and Kindred are highly complementary, and I will be delighted to welcome Kindred’s management team and many talented individuals into the combined Group following this transaction.”
The acquisition, she said, “will give the group a diversified and balanced profile, based on several pillars; the monopoly activities, mainly the lottery, on our French historical market and, since November [2023], in Ireland, with the acquisition of the Irish lottery operator Premier Lotteries Ireland; and online sports betting and gaming activities open to competition in Europe.”
She called Kindred, “one of the leading operators, combining strong brands, best-in-class technology platforms, an attractive growth profile and a committed approach to responsible gaming.”
Kindred CEO Nils Andén commented, “I’m delighted with today’s transaction announcement between FDJ and Kindred, creating a leading European gaming operator with the financial and strategic capabilities to further expand its global footprint.”
Andén continued, “I believe that combining with FDJ, Kindred can accelerate the delivery of long-term strategic projects, continue to grow in core markets, and provide a trusted source of entertainment to customers. It will also speed up our path towards 100% locally regulated revenue.”
Andén added, “I’m excited to bring Kindred’s extensive experience and know-how into FDJ’s organization, contributing to the development of a leading online gaming business. I’m also very proud that FDJ acknowledges and values the skilled employees and strong assets within Kindred.”
Ed Birkin, senior analyst at H2 Gambling Capital, told iGaming Business that the FDJ move indicates an accelerated bid for domination of the European market.
“It’s been clear for a while that FDJ are looking to expand into new markets and out of their traditional monopoly, with the acquisition of ZEturf and Premier Lotteries Ireland, but this is a major step-change in their strategic shift,” said Birkin.
He added that FDJ will greatly benefit from the acquisition. “It gives them access to new products – especially in the igaming space, which accounts for 60% of Kindred’s revenues – and entry into new markets, as well as solidifying their positioning in the ‘competitive’ French online markets,” said Birkin.
Birkin continued, “If the French market were to open to icasino, it would also give them a very strong position from day one – something that is very important, given the potential market size.”
But he also warned, “projections are not the same as actual earnings. I would argue that the purchase is more to do with strategy than a value play.”
Commenting on FDJ’s stated goal of becoming a “European gambling champion” Birkin told iGB, “I do think that this is a meaningful step-change in the company moving from a monopoly French operator with an online presence towards becoming a multi-product top tier European operator.”
That said, FDJ’s expansionist policies have drawn the ire of France’s biggest casino groups, the newspaper Les Echos reported. A letter by the CEOs of the Barrière, Partouche, Tranchant and JOA casino groups was written to French Prime Minister Gabriel Attal criticizing FDJ’s “monopolistic advantages.”
The company’s unfair advantages include “access (to FDJ premises) without ID, the ease with which new games can be offered, the absence of controls at points of sale, unlike casinos, and the use of the same FDJ customer account for games (offered under its) monopoly and (those operated in a) competitive context,” the letter said.
FDJ commented to Les Echos that it plans to split its land-based and online databases soon. It told the newspaper it is giving a high priority “to preventing excessive gambling and gambling by minors, both in the physical distribution network and online.”
The letter may be a preemptive strike by the companies in advance of a possible move by the government to grant an exclusive license to PDJ to operate online gaming products in France, reported Les Echos.
