Entain, a London-listed company, has recently made an agreement to acquire STS Holdings, a leading Polish betting operator, for a total consideration of £750 million. The acquisition will be facilitated through Entain CEE, Entain's venture in Central and Eastern Europe, in collaboration with EMMA Capital.
To acquire 100% of STS, Entain has launched a tender offer at a purchase price of PLN24.80 per share, which represents a significant premium. This offer is 35% higher than the 6-month volume weighted average price of PLN18.33 and a 20% premium to the spot price of PLN20.75 as of 12 June.
The CEO of Entain, Jette Nygaard-Anderson, expressed excitement about the acquisition, stating, "We are delighted to be acquiring the leading sports-betting operator in Poland, which is a hugely exciting and fast-growing market." Nygaard-Anderson also emphasized that the transaction aligns perfectly with Entain's strategy of acquiring high-quality businesses in attractive and regulated markets.
The funding for the acquisition will be provided by Entain and EMMA Capital in proportion to their current shareholding in Entain CEE, with a 75% to 25% split, respectively. The funding will involve an equity placing and a separate retail offer through the PrimaryBid platform, which is expected to raise gross proceeds of £600 million.
Notably, Mateusz Juroszek, CEO of STS, and his father Zbigniew Juroszek, who together hold around 70% of STS's share capital, have entered into a binding agreement to accept the offer. As part of the agreement, the Juroszek Foundations will reinvest a portion of their proceeds into Entain CEE, securing a 10% economic stake in the company.
Following the acquisition, the economic rights of Entain CEE will be divided as approximately 67.5% owned by Entain, 22.5% owned by EMMA Capital, and 10% owned by the Juroszek Foundations. Moreover, the Juroszek Foundations' 10% stake includes a clawback provision, allowing Entain CEE to reclaim up to half of the shares if certain financial hurdles are not met by STS in 2023.
The CEO of STS, Mateusz Juroszek, expressed his enthusiasm for the acquisition and the growth opportunities it presents, stating, "Entain is a world-class operator and has already made a significant investment in this region through SuperSport in Croatia. We could not have found a better partner to help us take STS into the next phase of its growth."
STS, which is listed in Warsaw, operates 400 retail stores and has a strong online business. In 2022, it generated PLN663 million in net gaming revenue, with the online segment accounting for 82% of the revenue. At the end of last year, STS had 783,000 total active users.
The CEO of Entain CEE, Radim Haluza, will continue to oversee the success of both STS and SuperSport, while Mateusz Juroszek will remain as CEO of STS and join the board of Entain CEE.
The transaction is expected to bring about more than £10 million in run-rate synergies. However, it is worth noting that shares in Entain plc were trading 10.18% lower in London, while shares in STS Holding SA were up 12.09% in Warsaw at the time of reporting.
By fLEXI tEAM