Canadian gaming operator The Stars Group Inc., the company behind the PokerStars brand, said Saturday it has agreed to acquire Sky Betting & Gaming in a cash and stock transaction valued at $4.7 billion, creating the world’s largest publicly listed online gaming company.
The deal is the company’s largest since Stars bought PokerStars for $4.9 billion in 2014.
Toronto-based Stars Group will pay cash and stock to private equity firm CVC Capital Partners and Sky. Analysts had expected CVC – sponsor of the English Football League – to take Sky public. In February, Reuters reported that CVC had selected investment banks to lead an initial public offering.
CVC said it would receive around 425 million pounds ($595 million) in cash, as well as shares worth around 145 million pounds, in exchange for its 20 percent stake in Sky Bet. The deal is expected to be completed in the third quarter of this year.
“The acquisition of Sky Betting & Gaming is a landmark moment in the Stars Group’s history,” Stars Group CEO Rafi Ashkenazi said in a statement. “SBG operates one of the world’s fastest growing sportsbooks and is one of the United Kingdom’s leading gaming providers. SBG’s premier sports betting product is the ideal complement to our industry-leading poker platform.”
Added Ashkenazi, “Following this transaction, The Stars Group will have significantly enhanced scale and a highly-regarded global brand portfolio. As a result, we are well positioned to realize our vision of becoming the world’s favorite iGaming destination.”
The deal comprises $3.6 billion in cash and the rest in newly-issued shares, Stars Group said in the statement.
The Saturday morning announcement took some analysts by surprise.
“Wow, did not see this one coming,” Eilers & Krejcik Gaming principal Adam Krejcik posted on Twitter shortly after the press release crossed the wires. “Big transaction in world of sports betting/iGaming and amazing exit for CVC.”
Stars Group will grow its exposure to sports betting, the company said. It would also help increase its presence in the United Kingdom, the largest regulated online gaming in the world, and provide $70 million in cost savings.
“We are delighted to join forces with The Stars Group,” Richard Flint, Sky Betting’s CEO, said in a statement. “We have had a fantastic last few years and would like to thank CVC and Sky for supporting us in becoming a leading online operator in the UK. This transaction allows us to offer our best-in-class products to a truly global audience. We’re excited about our future together.”
Ashkenazi took over as Stars Group CEO in December 2016 from founder David Baazov, who was facing charges for insider trading as well as poor earnings performance. Ashkenazi said last year he was seeking takeover targets as part of an effort to reduce Stars Group’s reliance on the online-poker business.
Reuters, Bloomberg and The Financial Times contributed to this report.
