Transaction Will Make The Stars Group World's Largest Publicly Listed Online Gaming Company

Published on April 21st, 2018 5:15 pm EST

The Stars Group Inc., parent company to brands such as Pokerstars, BetStars and the European Poker Tour, shocked the gaming industry earlier today when they announced that they had agreed to acquire Sky Betting + Gaming for $4.7 billion.

The deal is a cash and stock transaction, with Sky Gaming shareholders receiving $3.6 billion in cash and the rest in newly issued common shares. In order to finance the transaction (including financing the cash portion of the transaction and paying off SBG's outstanding debt), The Stars Group will be taking on $6.9 billion in debt, which includes a mix of first lien term loans, senior unsecured notes and a $400 million revolving credit facility.

If you'll remember, some of William Hill's largest shareholders torpedoed The Stars Group's planned merger with William Hill, as they were worried about The Stars Group's stagnating poker revenue and the large amount of debt that the combined company would take on. It will be interesting to see if SBG's shareholders have the same worries.

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The Stars Group has been desperately trying to diversify their revenue mix over the past couple of years by introducing BetStars and their casino product.

They had made no secret about the fact that they were looking to make a splash or two in terms of the merger and acquisition market, though many thought that they would be pursuing smaller transactions instead.

According to The Stars Group, on a pro forma basis to include the anticipated acquisitions of SBG, CrownBet and William Hill Australia, Pokerstars would have had a revenue mix by product of 37% poker, 34% sportsbook and 26% casino in 2017.

The Stars Group pointed out in their press release that Sky Betting + Gaming posted over 600 million pounds in annual revenue in 2017 along with unaudited adjusted EBITDA of just over 200 million pounds.

There is no doubt that this transaction makes The Stars Group one of the 800 pound gorillas of the online gaming industry, with the company suddenly gaining a strong foothold into the lucrative UK online sports betting market.

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The Stars Group is taking on an enormous amount to debt to finance this transaction - will it be successful?

Source: Starsgroup.com - The Stars Group To Acquire Sky Betting & Gaming For $4.7 Billion

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