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FDJ publishes public tender offer for Kindred

| By Robert Fletcher
French lottery and gaming giant La Française des Jeux (FDJ) has published the public tender offer document for its proposed acquisition of Kindred Group.

Revealed today (19 February), the document follows the offer FDJ put forward last month, valuing Kindred at SEK27.96bn (£2.12bn/€2.49bn/$2.68bn). 

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. That was the final day of trading prior to the offer coming to light.

The public tender document confirms this offer. An acceptance period will begin tomorrow (20 February) and run through to 19 November. The Kindred board has already unanimously recommended shareholders accept the offer, while the FDJ board is backing the proposal.

FDJ also notes an initial commencement of settlement date of 28 November. 

Certain other conditions must also be met for the deal to close. FDJ says it expects to meet all these by the end of the acceptance period. Should approvals be secured prior to the end of this, the acceptance period may close early.

FDJ targets “European gaming champion” 

Announcing the offer last month, FDJ said the deal would create the second largest operator in Europe’s gaming sector. Combining the businesses, it added, would create a “European gaming champion” with stronger revenue and earnings growth.

“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,” FDJ CEO and chair Stéphane Pallez said.

“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 Nils Andén agrees the combination will benefit both businesses and support growth moving forward.

“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.”

What do the analysts think?

As is the case with all M&A deals, it ultimately comes down to strategy. However, Ed Birkin, a senior analyst at H2 Gambling Capital, said the Kindred offer is a whole new level for FDJ.

Birkin said it has been clear for a while FDJ is looking to expand into new markets and out of its traditional monopoly, highlighting the acquisition of ZEturf and Premier Lotteries Ireland. He went on to say Kindred represents a “major step-change” in its strategic shift.

“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,” he said.

“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.”

Building on 2023 success for FDJ and Kindred

Shortly after the offer was announced, both FDJ and Kindred published financial updates for 2023.

With FDJ, the operator said revenue was 6.5% higher at €2.62bn. This was confirmed last week when FDJ posted its 2023 results in full. Other key figures from the past year for FDJ include an 11.3% rise in EBITDA to €657m and a 38.0% jump in net profit to €425m.

As for Kindred, the initial trading update forecast a rise in revenue and earnings. Publishing its full-year results this month, Kindred reported a 13.3% increase in revenue to £1.21bn, with £1.17bn coming from B2B activities.

However, higher costs meant net profit for the year hit £47.2m, a drop of 60.7% from 2022. In addition, EBITDA for 2023 was 18.6% lower at £152.6m but underlying EBITDA climbed 58.3% to £204.5m.

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