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FDJ tables €2.45bn offer to acquire Kindred Group

| By iGB Editorial Team
French lottery and gaming giant La Française des Jeux (FDJ) has submitted an offer worth SEK27.96bn (£2.10bn/€2.45bn/$2.67bn) to acquire the entire outstanding share capital of Kindred Group.
France ANJ

Reported over the weekend by the Wall Street Journal, Kindred confirmed the takeover offer from FDJ last night (21 January). Further details have been confirmed this morning (22 January) by both Kindred and FDJ.

FDJ has offered SEK130 in cash for each Swedish Depository Receipt (SDR) in Kindred. This is 24.4% higher than the SEK104.50 price of Kindred shares at close on 19 January, the final day of trading prior to the offer coming to light.

Kindred said that the price also places the full value of the proposal at 10.9x its 2023 underlying EBITDA.

Kindred has “unanimously” recommended shareholders accept the offer. The acceptance period is set to begin on or around 20 February and expire on 19 November.

Five key shareholders in Kindred, which collectively hold 27.9% of all shares, have irrevocably undertaken to support the offer. These include Corvex Management, Premier Investissement, Eminence Capital, Veralda Investment and Nordea.

The deal, however, remains subject to a host of closing conditions. These include 90% of Kindred shareholders accepting the offer, regulatory approvals and no other party tabling an improved proposal.

FDJ aims to create “European gaming champion”  

In its own statement, FDJ said the deal would create the second largest operator in Europe’s gaming sector. It added the combination would result in a “European gaming champion” with stronger revenue and earnings growth.

FDJ added the purchase would create value for its own shareholders. In particular, FDJ said it is expected to lead to a more than 10% accretion in dividend per share. This will start from the 2025 financial year and be paid in 2026.

As is the case with Kindred, the FDJ board is also supporting the proposed acquisition.  

“Fully aligned with our strategy, it 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,” FDJ CEO and chair Stéphane Pallez said.

“In this market, Kindred is one of the leading operators, combining strong brands, best-in-class technology platforms, an attractive growth profile and a committed approach to responsible gaming. 

“Given their respective histories, strategic strengths and core values, FDJ and Kindred are highly complementary. The combination will result in a stronger strategic positioning and significant value creation for the benefit of our shareholders and broader stakeholders.”

Kindred CEO excited over deal’s potential

Nils Andén, CEO of Kindred, also spoke positively about the proposal. Andén said that the combination would benefit both businesses and support growth moving forward.

Kindred Group CEO Nils Andén
Nils Andén, CEO of Kindred has spoken positively about the proposal

 “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 said.

“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.

“I’m excited to bring Kindred’s extensive experience and know-how into FDJ’s organisation, 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.”

End in sight for strategic review?

The acquisition offer comes after Kindred first mooted a possible sale in mid-2022. Among the companies contacted were Entain, 888 and Tipico, as well as Apollo Global and Blackstone. However, this did not result in any interest. 

This was followed up with the launch of a review of strategic alternatives in April last year, which Kindred said could lead to a merger, sale or partial sale of the business. Kindred said this review remains ongoing despite FDJ tabling its proposal. 

“[The] strategic review initiated by the board in April 2023 is ongoing and the company continues to evaluate options to deliver shareholder value,” Kindred said. “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 strategic review, however, heralded wholesale change. Long-serving chief executive Henrik Tjärnström departed along with almost all of Kindred’s C-level team. The business is currently led by an interim C-suite headed by CEO Nils Andén.

The operator is also withdrawing from the North American market, aiming to exit by Q2 2024 to refocus financial and technology resources on key markets. This was announced alongside a wave of layoffs, with up to 300 jobs to go.

The business is due to announce its full year results for 2023 on 7 February. However, a trading update has gone live today, with FDJ following suit with its own update.

FDJ begins to flex financial muscle

Kindred’s prospective new owner FDJ has recently begun to ramp up expansion efforts, alongside a long-running process of digitising its core lottery and sports betting businesses. 

FDJ now runs the Irish National Lottery after the PLI deal that closed in Q4 2023. This followed the €175m acquisition of horse race betting operator ZeTurf, to diversify its online business beyond lottery, poker and sports. 

France’s lottery monopoly holder reported revenue of €1.88bn for the first nine months of 2023, with sports betting and igaming’s contribution growing 9.3% to €360m. 

A deal for Kindred, which operates across a range of European markets and the UK, further expands its geographic footprint, as well as providing the business with a proprietary sports betting platform.

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