Entain shares rose 2.9% to 1,346.5p in early morning trading on Thursday after the betting group announced the formation of Entain CEE with Czech Republic investment firm EMMA Capital.
The gambling firm is set to use the new venture to expand its reach across Central and Eastern Europe.
Entain will reportedly own 75% of Entain CEE’s economic rights, and will also acquire 75% of the economic rights to Croatian gaming and sportsbook operating SuperSport from EMMA.
The gaming company said the CEE region represented an attractive opportunity to widen its customer income, with the €5 billion betting and gaming market expected to grow at least 10% each year until 2025.
Meanwhile, SuperSport is set to provide access to Croatia with a 54% market share in the region and 70% brand awareness driven by sponsorship agreements, with 85% of FY 2021 revenue delivered by online sales.
“We are excited to create Entain CEE with EMMA to underpin our strategy across the CEE region, and to be acquiring the leading betting and gaming operator in the highly attractive, fully regulated Croatian market,” said Entain CEO Jette Nygaard-Anderson.
“We see Croatia as an exciting, dynamic country which Entain CEE is perfectly positioned to expand from – we are very much looking forward to growing our business responsibly within the country and the region.”
“By bringing together Entain’s global expertise and EMMA’s regional investment track record, we are creating a growth platform with considerable opportunity.”
Entain confirmed a payment of €600 million in cash at completion and an additional contingent payment to EMMA in early 2023 based on SuperSport’s EBITDA for FY 2022, expected to be in the range of €90 million.
EMMA will contribute its 25% stake in the Croatian firm to Entain CEE at an initial implied valuation of €200 million, with the contingent payment implying a further €30 million in value contributed by EMMA.
The total acquisition is expected to value SuperSport at €920.
The transaction will be financed via a €700 million bridge loan from Deutsche Bank, Lloyds, Mediobanca, NatWest and Santander.
The agreement is scheduled to close in Q4 2022, conditional on regulatory approvals.
“I am looking forward to joining with Entain and further building on the significant opportunity presented in this region,” said SuperSport CEO Radim Haluza.
“The prospect of leading Entain CEE to drive expansion in fully regulated markets is an exciting opportunity, and EMMA’s investment expertise combined with Entain’s world-class platform will give us the competitive edge in delivering on the CEE opportunity.”
