Zeal co-founder Peters backs Lotto24 takeover

Zeal Network’s co-founder Marc Peters has backed the company’s proposed takeover of Lotto24 ahead of Friday’s crunch vote at an emergency general meeting.

Peters, who owns a 4.8% stake in the business, said in a letter submitted to the lottery operator that he was convinced the Lotto24 acquisition originally proposed in November would be beneficial to the business.

“Having reviewed the proposed transaction as well as the recent changes in the regulatory environment in detail, I have come to the conclusion that both the business model change as well as the proposed transaction with Lotto24 are the right way forward for the company,” Peters, who founded Zeal with Jens Schumann in 1999 said.

Peters’ announcement comes after Zeal last week rejected a takeover bid of up to €76m for its German-facing Tipp24 business from Lottoland, which holds a 5.5% stake in Zeal, and has been a vocal opponent of the Lotto24 deal.

Zeal hopes Peters’ endorsement will persuade other shareholders to back the board’s takeover plan when it is voted on later this week.

“Zeal views the endorsement by Mr. Peters as further confirmation that the planned transformation of its business model in Germany to lottery brokerage and the creation of the leading private digital lottery broker in Germany through the combination with Lotto24 is the best strategy for the company,” the company said.

The proposed takeover of Lotto24 aims to create a digital lottery giant with a 5m-strong global customer database, billings of $500m (£391.2m/€436.3m) and a diversified international footprint. It will see Tipp24 pivot away from lottery betting – a vertical that has come under increasing regulatory scrutiny in Germany in recent years – to focus on lottery brokerage.

Meanwhile, Lottoland CEO Nigel Birrell has made a direct appeal in open letter to Zeal shareholders, calling on them to force the board to reconsider its non-binding offer and reject what he calls the “Günther Family Transaction”.

Birrell described the Zeal/Lotto24 deal as “value destroying” and alleged that it disproportionately benefits the Günther family, which he claims owns around 10% of Zeal shares and of 45% of Lotto24. 

Birrell again called for this week’s vote to be delayed so that more work can be done on Lottoland’s bid for Zeal.

“In summary, the Lottoland offer is superior financially to the Günther Family Transaction, deliverable, subject to minimal conditionality and could be executed within a shorter time frame,” Birrell said. “Therefore, the General Meeting should be delayed so that the Lottoland offer can be fully evaluated and put to the Zeal Shareholders to vote on it.

“Alternatively, if the general meeting is not delayed, we urge all Zeal shareholders to vote against both of the proposed resolutions so no further value is destroyed.”

Lottoland has increased its share in Zeal by more than a third to 5.5% in recent days as it bolsters its position ahead of the vote.

Zeal rejected Lottoland’s offer within hours last week, saying it significantly undervalues Tipp24.com, and would strip the business of its most valuable asset.

Chief executive Helmut Becker (pictured) claimed Lottoland was attempting to purchase core Zeal assets on the cheap, adding that the main purpose of the offer was to disrupt the pending Lotto24 acquisition.

“It does not reflect the value of our German business,” Becker said. “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.”