FDJ finalizes acquisition of Kindred Group for EUR 2.45 billion – mergers and acquisitions

In January, FDJ made a €2.45 ​​billion (£2.06 billion/$2.70 billion) bid to acquire Kindred. This, according to FDJ, would create a “European gaming champion” and the second largest gambling operator in Europe.

The offer was accompanied by a number of closing conditions, including acceptance of the offer by 90% of Kindred’s shareholders. Initially, the offer was supported by shareholders holding 27.9% of all shares, including: Corvex Management, Premier Investment, Eminence Capital, Veralda Investment and Nordea.

In the following months, FDJ sought the consent of all shareholders. The application period was to last until November 19. However, last month that date was pushed back to October 2 in hopes of finalizing the deal sooner.

This decision proved successful, and the FDJ stated that by October 2, 195,659,291 Swedish Depositary Receipts (SDRs), representing 90.66% of the total capital, had been tendered. FDJ has already acquired 2,400,000 SDRs directly from Veralda, representing 1.11% of Kindred’s total holding.

Therefore, FDJ faced the precedent of having control of over 90% and decided to complete the acquisition of the group. Kindred “unanimously” recommended that shareholders accept the offer.

Settlement for Kindred shareholders who submitted SDR offers will take place from October 11. FDJ will implement the procedure for the compulsory buyout of the Nasdaq stock exchange in Stockholm. Moreover, shareholders who have not yet submitted tender shares can now do so under unchanged conditions until October 18, with the deadline for delivery of shares on October 29.

FDJ hopes for profitable growth with Kindred

In a speech following the completion of the acquisition, FDJ CEO and president Stéphane Pallez said she was “delighted” to have completed the acquisition. She said the combined company would now pursue “sustainable and profitable” growth.

“Kindred has strong brands, recognized technological excellence and an attractive growth and profitability profile,” Pallez said. “All this will enhance FDJ’s strengths. Both groups also share high standards of responsible gaming and a business model that combines efficiency and responsibility.

“This acquisition creates a new European champion. We intend to pursue a strategy of sustainable and profitable growth for the benefit of all stakeholders.”

Kindred counts Unibet and 32Red among its brands, with a presence in key markets such as the UK, France, Sweden and Belgium.

As for FDJ, in recent years the group has expanded beyond its traditional French market through several acquisitions. These include online horse racing betting operator ZEturf for €175 million in October 2023 and Premier Lotteries Ireland (PLI) for €350 million a few weeks later.

In its latest first-half results, FDJ highlighted these acquisitions as a key driver of digital revenue growth. Digital revenue was 39.8% higher year-on-year and total group revenue increased 10.8% to €1.43 billion. Moreover, consolidated net profit increased by 17.5% to EUR 213 million.

What will the combined business look like?

After announcing its completion, FDJ presented the structure of the newly merged company.

FDJ will remain the core business, with “France Monopoly” encompassing lotteries and point-of-sale sports betting and accounting for 64% of the business.

The French competition authority approved the merger in September but warned FDJ against promoting its commercial products to lottery monopoly customers.

The “Competitive Online Betting and Gaming” banner will feature Kindred’s B2C and Relax offerings, as well as FDJ’s online sports betting, poker and ZEturf activities. This will constitute 30% of the entire group.

“International lottery”, which includes PLI operations and B2B lotteries, will account for another 4%. Additionally, “Payments and Services” will cover the remaining 2% of the business.

FDJ estimates that if Kindred were acquired on January 1, 2023, it would report total revenues of €3.5 billion and total recurring EBITDA of €840 million for the full fiscal year 2023.

If the end date was extended to January 1, 2024, total revenues for the first half of this year would be approximately USD 1.90 billion and total recurring EBITDA would be EUR 490 million.