The Stars Group strengthened its position in Australia after completing two acquisition deals. The first deal was made in Feb which resulted in the Canadian gaming giant becoming the majority shareholder in CrownBet. The second acquisition took place on March 6 when CrownBet won a bidding process after putting in a bid for $300 million to acquire William Hill Australia.
Stars Group Boosts CrownBet Stake To Acquire William Hill Australia
The Stars Group announced this week that it has increased its 62 percent equity interest in CrownBet Holdings to 80 percent to enable the company to acquire William Hill Australia. The two deals will cost The Stars Group around $315 million, where $234 million will be paid to William Hill Australia in cash and the remaining payable in approximately 3.1 million common shares newly issued by the company in its increased stakes in CrownBet.
The new CrownBet deal comes shortly after The Stars Group re-entered the Australian Market last month by acquiring 62 percent of CrownBet for $117.7 million. The new positioning of The Stars Group in CrownBet replaced Crown as the majority shareholder in the company. Many believe that CrownBet will soon be rebranded following the change in majority ownership.
According to Rafi Ashkenazi, chief executive of The Stars Group, the decision to increase their stakes in CrownBet comes from the continuing strength of the brand in the online sports wagering market in Australia.
Stars Group To Focus On Sports Betting Market
CrownBet had grown its un-audited annual revenues significantly going from $76.5 million in 2015 to $204 million in 2017. This increase in revenue is mainly due to the development of its strategically contracted partnerships, developments in its proprietary technology and mobile app, and the profitability of its market-leading loyalty program.
The Stars Group has been looking to expand its online sports betting businesses, it made a lot of business sense for them to increase their equity in CrownBet. This increase in share holdings will enable the company to expand its sports betting offerings and even boost its offerings in North America should New Jersey win its Supreme Court case to legalize sports-betting.
The Stars Group’s push to become the majority stakeholder in CrownBet enabled the operator to secure a winning bid in the William Hill Australia sale. CrownBet’s $300-million winning bid edged out bids from bet365, Ladbrokes, and Paddy Power as the bidding process was tight. Stars Group confirmed that it had won the bid after making an announcement to the London stock exchange.
William Hill Acquisition Will Boost Sports Betting Offering
The acquisition of William Hill is expected to further grow CrownBet’s share of the sports-betting market in Australia. This will help them pose a bigger threat to rival bookmakers Tabcorp and Sportsbet. CrownBet’s influence is strongest in the state of Victoria. William Hill’s prominence in the non-AFL states of Queensland and New South Wales will boost the brand’s presence in these states.
William Hill Australia posted A$190.5 million in unaudited annual revenues and A$49.6 million in unaudited annual EBITDA in 2017. The Stars Group expects the synergy between William Hill and CrowBet to generate at least 12.1 times the 2017 unaudited EBITDA in the coming years.
CrownBet’s management team headed by Chief Executive Officer Matthew Tripp will be responsible for operating the combined business of these two companies in the country. Since the Stars Group is the majority shareholder of CrownBet, the company will retain the right to appoint the majority of CrownBet’s board of directors.
Stars Group Continues To Expand Globally
The Stars Group anticipates rebranding and integration costs to slow the combined business until 2019. After this, they are still estimating gross cost synergies of approximately A$50 million annually. But Ashkenazi is hopeful despite the challenges to sports-wagering and online casinos that the government rolled out in February. The two acquisitions will continue to boost the Star’s Group control of the gambling industry across the world.
In a statement, Ashkenazi said, “These acquisitions will further increase our exposure to the attractive regulated Australian sportsbook market. With complementary geographic profiles, we expect the combined business to leverage CrownBet’s operating and proprietary technology platform and be well positioned for growth and to navigate the ongoing regulatory and taxation changes in the Australian market.”