Stars Group Acquires SkyBet for US$4.7bn

Briony O’Neill -

PokerStars proprietor and Canadian online gambling heavyweight, The Stars Group has committed to purchasing UK-based Sky Betting & Gaming (SkyBet) for US$4.7 billion before the year is out. The two companies announced the deal, by which The Stars Group will become the world’s largest listed gambling company, in an official statement on Sunday.

Subject to Toronto Stock Exchange, NASDAQ, and regulatory approval, the landmark acquisition will likely be finalised within the Quarter 3 of this year. The US$4.7 billion purchase agreement includes an initial cash payout of $3.6 billion and the subsequent issue of 37.9 million newly issued common shares to SkyBet owners, Capital Partners and Sky Plc.

With this new arrangement, both The Stars Group and SkyBet will have better market access. The Stars Group’s global footprint will broaden considerably as will is portfolio, as the operator seeks to strengthen its non-poker offerings.

Financing the Acquisition

In order to make the aforementioned $3.6 billion cash payment, The Stars Group has secured roughly US$6.9 billion in debt financing. This will also be used to cover SkyBet’s outstanding debt, in addition to refinancing the company’s current first-lien-term loam.

As a longstanding NASDAQ- and TXI-listed corporation, The Stars Group is no stranger to deals of this magnitude. In 2014, the firm purchased PokerStars and sister brand, Full Tilt poker in a historic $4.9-billion deal.

In February this year, The Stars Group announced its intention to acquire a 62% stake in major Australian betting operator, CrownBet for US$117.7 million. While this fee may seem insignificant in comparison to the SkyBet and PokerStars deals, its long-term profitability could be exponential.

This is because CrownBet is poised to acquire fellow Aussie betting giant, William Hill, which will make it the third-largest operator in this market, in the very near future.

Key Market Access

Although The Stars Group is already the owner of the world’s largest online poker operator, PokerStars, it is not content to focus on poker alone. With the poker market showing little sign of growth in recent years, The Stars Group has been on a mission to strengthen its casino and betting offerings.

As the operator with the largest active online player base in the UK, SkyBet is an ideal choice as The Stars Group seeks to diversify its portfolio. This applies equally to SkyBet’s geographical presence, which is particularly dominant in the United Kingdom and Italy.

It is also likely that the acquisition of SkyBet, which generated £624 million in revenue and £202 million in adjusted EBITDA last year, will ease the country’s entry into the US market, in the event that regulation eases up in this region.