Entain expands Canadian footprint with C$300m Avid Gaming acquisition
FTSE 100 operator sees increased scale and local gains with “highly complementary” nine-figure purchase
Entain has agreed a C$300m (£174m) deal to acquire long-standing Canadian online operator Avid Gaming from owner Middlebrook Investments Limited.
Avid Gaming owns Sports Interaction, a Canada-facing online sports betting business headquartered in Jersey, with offices in the Mohawk Territory of Kahnawà:ke and Ireland.
Avid Gaming licenses the Sports Interaction trademark as well as providing betting and gambling products to the Mohawk Council of Kahnawà:ke (MCK) and the Mohawk Online socioeconomic initiative.
It is licensed by the Kahnawà:ke Gaming Commission, a Canadian First Nations province which licenses and operates igaming in Canada for international operators.
Mohawk Online, which is wholly owned by the MCK, operates Sports Interaction in Canada and funnels all of its online revenue back to the tribe to be used for social and economic causes.
Under the terms of the deal, Avid Gaming CEO Will Golby, along with several other members of the firm’s executive team, will transition to Entain on completion.
It is understood 50% of Avid Gaming employees in Kahnawà:ke are from the indigenous Mohawk tribe.
In a statement confirming the acquisition, Entain CEO Jette Nygaard-Andersen branded the Sports Interaction business a “highly complementary” one to its existing PartyCasino and bwin brands in Canada.
“Sports Interaction is the leading Canadian sports betting and gaming brand and is aligned perfectly with our own ambitions of great customer service and ambitious growth, coupled with an unwavering commitment to sustainability,” Nygaard-Andersen explained.
“It is highly complementary to our existing operations in Canada, and the combination of its local expertise and Entain’s powerful platform will provide customers with an unrivalled range of exciting and engaging products in this fast-growing market.”
She continued: “We look forward to welcoming Will Golby and his team to Entain.
“Investing in the communities where we operate is a key pillar of Entain’s sustainability strategy. We are therefore delighted to be supporting the Mohawk Online socio-economic initiative,” Nygaard-Andersen concluded.
According to figures provided by Entain, the Sports Interaction business revenue rose 40% year-on-year during 2021 to C$76m, with an EBITDA of C$18m and profits before tax of C$17.4m.
The FTSE 100 operator has said it expects the deal to deliver C$15m in synergies by 2023, with those gains being predominantly in areas including technology, content and procurement.
These savings, Entain has said, will result in a “post synergies acquisition multiple” of approximately seven times its 2023 EBITDA.
“Canada is a highly attractive and fast-growing sports betting and gaming market,” Entain said.
“The combination will bring Entain’s global scale, expertise and market-leading platform together with Sports Interaction’s local expertise, capabilities and partnerships,” Entain said.
“As a result the combined business will provide customers with a broader offering of engaging products and services for the Canadian market.
“Together with Entain’s application for an Ontario licence, this acquisition provides an excellent opportunity to drive further growth, in line with the group’s growth and sustainability strategy,” the London-listed firm added.
In a note, Regulus Partners suggested there was a “lot to like” about the deal for investors.
“The company operates the strongest Canadian sports betting brand by some margin, largely for want of effective competition (the lottery monopolies could not offer singles betting, the offshore grey market is less visible).
“Equally, at C$76m revenue, we believe that Sports Interaction has been materially underperforming its brand presence operationally, meaning that revenue synergies could be significantly greater than the C$15m of cost synergies expected, in our view.
The note continued: “Acquiring a powerful local brand, an influential local voice and local operational capability before Ontario opens clearly has strategic merit and considerable operational potential for Entain.
“However, Avid Gaming had built an enviable turnkey client position in a market which is supposed to become strategically vital. Given the regulatory uncertainty over Kahnawake, combined with the significant competitive pressure about to be unleashed in Ontario, its shareholders are perhaps shrewd to be exiting now,” he added.