Entain launches new CEE venture in partnership with EMMA Capital
Entain Plc has disclosed its plans to become the leading Central and Eastern European betting business by launching a new venture, ‘Entain CEE’.
As announced this morning in the FTSE100’s gambling group’s H1 2022 Interim results, Entain has agreed to acquire a majority stake in leading Croatian betting group SuperSport for €600m.
The deal will see Entain acquire a 75% stake in SuperSport from Czech investment fund EMMA Capital, which has subsequently become a partner in the formation of Entain CEE.
Updating investors, Entain leadership outlined the strategic rationale for the firm’s latest M&A, branding CEE’s markets as underpenetrated and highly attractive, maintaining an estimated €5bn regulated online marketplace by 2025.
SuperSport was branded as the scale-proof operator for CCE markets that had achieved 54% market share in Croatia – with growth underpinned by its own proprietary technology, deemed as the optimal platform to launch the Entain CEE Venture.
Group CEO Jette Nygaard-Anderson explained – “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.
“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.”
Dealmakers revealed that SuperSport has been valued at €920m, implying a transaction multiple of x6 on 2022 EBITDA results.
JV-partner EMMA will contribute its 25% stake in SuperSport to Entain CEE at an initial implied valuation of €200m, with the contingent payment implying an additional €30m value contributed by the Czech fund.
Deal terms stipulate that Entain reserves a three-year option to acquire EMMA’s 25%, allowing the company to take outright control of the Entain CEE business.
The firm’s investment in SuperSport will be financed through a €700 bridge loan underwritten by Deutsche Bank, Lloyds, Mediobanca, NatWest, and Santander.
Backing the JV agreement, Pavel Horák, EMMA’s Chief Investment Officer, said: “EMMA is very happy to be partnering with the leading global betting, gaming and interactive entertainment business to unlock the opportunity posed by the CEE betting and gaming market.
“We see the Entain CEE structure as a clear opportunity for creating value for shareholders, and we look forward to working closely and collaboratively with Entain”.
Further strategic benefits will see Entain CEE led by the executive team of SuperSport under the leadership of Chief Executive Radim Haluza, tasked with identifying further Eastern European growth opportunities.
The acquisition will increase Entain’s pro-forma net debt to EBITDA leverage ratio in 2022 by 0.4x, with the transaction expected to complete in Q4 2022, conditional upon regulatory approvals.
Radim Haluza, SuperSport CEO, commented: “I am looking forward to joining with Entain and further building on the significant opportunity presented in this region.
“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.”