888 trims regional exposure with €28.25m Latvian business sale to Paf

888 Holdings has sold its Latvian operations to Paf for a total consideration of €28.25m (£24.6m).

Paf will pay an initial fee of €24m for the business, which operates with a local licence using the William Hill and Mr Green domains.

The deal includes a potential further earn-out of up to €4.25m payable in 2024, upon the completion of the group’s 2023 audited financials.

888 owns 90% of the Latvia based business and has said it will use the proceeds from the sale for “general” corporate purposes, which could include the repayment of its high corporate debts.

Completion of the deal is contingent on an agreed carve out of the Latvian business from 888’s supplier contracts, its integration into Paf’s existing supplier contracts as well as change of control documentation and the payment of a dividend by the Latvian subsidiary.

However, 888 has confirmed the deal could be completed in the next few weeks. 888 executive chairman Lord Mendelsohn welcomed the deal, citing 888’s continual review of its asset base as part of both its long-term strategic goals and to maximise value for shareholders.

“As a business, our relatively limited exposure in the Baltic region means that the region is not one of our core or growth markets where we prioritise our investments,” Mendelsohn explained.

“The Latvian business is a high-quality, locally regulated business, with an excellent team that has built a strong market position.

“I would like to express my sincere thanks to the team for their dedication during their time with the group and I am highly confident that under new ownership with Paf, the business will continue to flourish,” he added.

According to figures provided by 888 the Latvian business generated net revenue of £9.1m and company EBITDA of £2.5m in 2022 with gross assets of £9.3m as at 31 December 2022.

Under the terms of the deal, 888 will provide PAF with a licence to continue the usage of both the William Hill and Mr Green brands in Latvia for a limited period.

The business operates largely as an independent entity, with its own management team and operating on a separate technology platform independent of the wider 888/Hills tech stack.

“As such the transaction is expected to have no impact on the ongoing operations and synergy program of the group and is consistent with the group strategy to focus on core and growth market plans,” 888 said in a statement confirming the deal.

In remarks about the deal, Latvia business co-founder and head of the Latvia-based board Janis Tregers cited the development of the business over its 10-year history.

“We launched in 2012 as 11.lv, and in 10 years, have built a market-leading position in Latvia, with over 10% market share,” Tregers said.

“In 2018, we sold 75% of the business to Mr Green at an enterprise value of €3.7m, and this transaction to sell the entire business for a valuation of up to €28m reflects the hard work of our team across the business resulting in significant value creation.

“Under the new ownership with Paf, I am confident that the business will continue to go from strength to strength, delivering great products and experiences for our customers,” he added.

Investment firm Tekkorp Capital acted as advisers to 888 on the sale transaction.