La Française des Jeux (FDJ), the French lottery and gaming giant, has made a significant move in the gaming industry by offering SEK27.96 billion (€2.45 billion) to acquire the entire outstanding share capital of Kindred Group. This development, initially reported by the Wall Street Journal, marks one of the largest acquisitions in the sector.
Terms of the Offer and Kindred’s Response
FDJ’s offer of SEK130 per Swedish Depository Receipt (SDR) in Kindred represents a 24.4% premium over Kindred’s share price as of January 19. The offer values Kindred at 10.9 times its projected 2023 underlying EBITDA. Kindred has unanimously recommended its shareholders to accept this lucrative offer, with an acceptance period starting around February 20.
Notably, five major shareholders holding a collective 27.9% stake in Kindred have committed to supporting the offer. This includes entities such as Corvex Management and Veralda Investment. However, the deal’s finalization hinges on several conditions, including regulatory approvals and a minimum acceptance from 90% of Kindred shareholders.
FDJ’s Vision: Creating a European Gaming Champion
FDJ envisions this acquisition as a stepping stone to becoming the second-largest operator in Europe’s gaming sector. “This merger is fully aligned with our strategic goals and will significantly boost our profile,” commented FDJ CEO and chair Stéphane Pallez. “The fusion of FDJ’s monopoly activities with Kindred’s online gaming prowess promises to create substantial value for shareholders and stakeholders alike.”
Optimistic Outlook from Kindred’s CEO on Merger Prospects
“The merger with FDJ is not just a union of two companies but a strategic acceleration for Kindred. It opens doors to substantial growth in our core markets and enables a faster transition to fully regulated revenue streams,”
Nils Andén, CEO @ Kindred
Andén further commented on the integration process, stating, “Integrating Kindred’s extensive expertise and innovation into FDJ’s broad operations is an exciting prospect. We look forward to bringing our strengths to this partnership and exploring new opportunities for advancement and success in the gaming industry.”
Towards a Strategic Convergence Following Review
Kindred’s engagement with FDJ comes after a comprehensive review of strategic alternatives initiated in April 2023. This review was aimed at exploring various strategic options, including mergers, sales, or partial divestments, to enhance shareholder value and position Kindred for future growth. During this period, Kindred underwent significant leadership restructuring, with Nils Andén assuming the role of CEO as part of an interim C-suite team. This strategic review and leadership change have been pivotal in steering Kindred towards this transformative opportunity with FDJ.
Withdrawing from North America to Refocus Resources
As part of its strategic realignment, Kindred has announced plans to withdraw from the North American market by the second quarter of 2024. This decision reflects Kindred’s focus on consolidating and strengthening its presence in its key markets. The exit strategy involves reallocating financial and technological resources to areas with higher growth potential and market stability. The withdrawal is also accompanied by a restructuring process, which includes a reduction in workforce. Up to 300 jobs are expected to be affected by this shift, as Kindred positions itself for a more focused and efficient operation in its primary markets.
FDJ’s Expanding Footprint
Meanwhile, FDJ is flexing its financial muscles with recent expansions, including the acquisition of the Irish National Lottery and diversification into online horse race betting. FDJ’s revenue growth, particularly in sports betting and iGaming, positions it strongly for this ambitious acquisition, expanding its geographic and operational scope significantly.
