Jumbo will pay an initial AU$32.1m (£16.9m/€20.3m/US$22.7m) to take ownership of 100% of the business, while the deal also includes up to $8.5m in deferred payments, which will be payable subject to StarVale achieving certain earnings targets.
The acquisition, Jumbo said, would further expand its global growth strategy, following the purchase of UK-based Gatherwell in December 2019 and its pending acquisition of Canada-based Stride Management, agreed in August last year.
UK-based StarVale provides services to over 850,000 active lottery players across over 45 charities and not-for-profit organisations, many of which are major UK charities. StarVale also owns DDPay Ltd, a digital payments business that facilitates Direct Debit payments and solutions to StarVale’s weekly lottery clients.
Jumbo said access to digital payments solution capabilities including Direct Debit origination services through the acquisition of DDPay, would provide cost efficiencies for Gatherwell and for its UK operations, as well as facilitate further access to the charitable giving market.
In addition, Jumbo said the acquisition would allow it to leverage its Powered By Jumbo (PBJ) platform to drive further growth for clients, as well as aid its expansion plans in the UK market.
Should the deal go ahead, StarVale would form part of Jumbo’s Managed Services business segment, along with Gatherwell and Stride. The acquisition remains subject to approval by the Great Britain Gambling Commission, with Jumbo expecting to complete the purchase before the end of its 2022 financial year.
“We identified StarVale as one of our top acquisition opportunities in the UK given their scale and leadership position in the charity lottery market, strong brands, cultural alignment with Jumbo and their talented leadership team,” Jumbo founder and chief executive Mike Veverka said.
“The acquisition helps accelerate our strategy to grow internationally and adds significantly more scale to our Managed Services business in the UK.”
Starvale director and founder Phil Magleave added: “I’m delighted that StarVale will soon join the Jumbo family and am looking forward to working with Jumbo to continue supporting our charity and not-for-profit clients raise vital funds for their ‘good causes’.
“With ongoing changes in technology and increased digitisation expected in the lottery industry, the acquisition by Jumbo will expand its product range and the opportunities available to its valued clients – and grow what is already a highly successful business.”
The deal comes after Jumbo last month said its planned acquisition of Stride Management will not take place until mid-2022 due to an “extensive” regulatory approval process.
Jumbo initially said the deal would go through before the end of 2021, but the retailer said that this will not occur until the fourth quarter of its 2021-22 financial year, ending 30 June, when it expects to receive approval to proceed with the purchase.