FDJ completes €2.45bn acquisition of Kindred Group

La Française des Jeux (FDJ) has declared the completion of its acquisition of Kindred Group after investors in the online gambling group accepted its purchase offer.

FDJ submitted a €2.45bn (£2.06bn/$2.70bn) bid to acquire Kindred back in January. This, FDJ said, would create a ‘European gaming champion’ and the second largest gambling operator in Europe.

With the bid came a series of closing conditions including that 90% of Kindred shareholders accept the offer. Initially, shareholders with 27.9% of all shares supported the offer, including Corvex Management, Premier Investissement, Eminence Capital, Veralda Investment and Nordea.

In the months that followed, FDJ has sought the approval of all shareholders. An acceptance period had been due to run until 19 November. However, last month this date was switched to 2 October in the hope of completing the deal early.

This decision proved successful with FDJ saying 195,659,291 Kindred Swedish Depository Receipts (SDRs), representing 90.66% of all capital, were tendered by 2 October. FDJ had already acquired 2,400,000 SDRs directly from Veralda, representing 1.11% of the total Kindred holding.

As such, FDJ met the precedent of controlling more than 90% and chose to complete the acquisition of the group. Kindred had “unanimously” recommended shareholders accept the offer.

Settlement-delivery for Kindred shareholders who have tendered SDRs will take place from 11 October. FDJ will implement a squeeze-out procedure on Nasdaq Stockholm. In addition, shareholders who have not tendered shares can now do so, on unchanged terms, until 18 October, with delivery due on 29 October.

FDJ eyes profitable growth with Kindred
Speaking on completion, FDJ CEO and chairwoman Stéphane Pallez said she is “delighted” to finalise the acquisition. She said the combined business will now pursue “sustainable and “profitable” growth.

“Kindred has strong brands, recognised technological excellence and an attractive growth and profitability profile,” Pallez said. “All of this will bolster FDJ’s strengths. The two groups also share high standards for responsible gaming and a business model that combines performance and responsibility.

“This acquisition creates a new European champion. We intend to pursue its strategy of sustainable and profitable growth for the benefit of all its 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, the group has expanded outside of its traditional French market in recent years through several acquisitions. These include online horse racing betting operator ZEturf for €175m in October 2023 and Premier Lotteries Ireland (PLI) for €350m a few weeks later.

In its most recent results for H1, FDJ highlighted these acquisitions as a key driver in digital revenue growth. Digital revenue was 39.8% higher year-on-year, with total group revenue up 10.8% to €1.43bn. On top of this, consolidated net profit jumped 17.5% to €213m.

What will the combined business look like?
Upon declaring completion, FDJ offered an insight into the make-up of the newly combined business.

FDJ will remain the core of the business, with ‘France Monopoly’ comprising lottery and point-of-sale sports betting, making up 64% of operations.

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

Under the ‘Competitive online betting and gaming’ banner will be Kindred’s B2C offering and Relax, as well as FDJ’s online sports betting, poker and ZEturf business. This will account for 30% of the entire group.

‘International lottery’, including PLI and lottery B2B operations, will make up a further 4%. In addition, ‘Payment and services’ will cover the remaining 2% of the business.

FDJ estimates it would have a recorded combined revenue of €3.5bn and combined recurring EBITDA of €840m for the full 2023 financial year if Kindred had been acquired on 1 January 2023.

If this completion date was switched to 1 January 2024, combined revenue for H1 this year would have been approximately $1.90bn and combined recurring EBITDA €490m.