Entain set to acquire STS for £750m
Polish operator will become a part of Entain CEE, with Mateusz Juroszek retaining his place at STS and joining the board of the Entain joint venture
Entain is set to acquire leading Polish operator STS for a total consideration of approximately £750m.
Under the proposed deal, STS will become a part of Entain Central and Eastern Europe (CEE), a joint venture between Entain and EMMA Capital, as the company looks to drive further regional growth by linking Entain with market leaders.
Entain has offered to acquire 100% of STS at a purchase price of PLN24.8 (£4.75) per share, representing a significant premium of 35% to the six-month volume-weighted average share price.
The offer values the Polish market leader at £750m, representing a steep price point for Entain as it continues its geographic expansion.
STS CEO Mateusz Juroszek and his father Zbigniew have entered into a binding agreement to irrevocably accept the offer. The duo own approximately 70% of STS’ shares.
The acceptance threshold has been set at 50% of shareholders, with a tender offer to be published in mid-July.
The Juroszeks will use some of the capital raised to reinvest in Entain CEE, taking a 10% stake in the company.
As part of the agreement, Mateusz Juroszek will retain his place as CEO of STS and will also take up a position on the board of directors of Entain CEE.
The deal is expected to complete in Q3 2023.
The acquisition of STS follows on from Entain CEE’s move for leading Croatian firm SuperSport last year as it looks to spread its presence in the region.
To provide funding for the acquisition, Entain has conducted a placement of its shares on the London Stock Exchange, recruiting Morgan Stanley and Merill Lynch as joint bookrunners at a price of £12.30 per share.
A separate retail placement was also conducted, raising overall proceeds of £600m.
Of these proceeds, £450m will be used as net cash consideration to fund the acquisition of STS, with the remaining capital to be used to fund further ventures in the region.
Entain detailed several key reasons behind actioning the multi-million-pound deal. The FTSE 100 operator noted the strong growth in the Polish market, with 2022 gross gaming revenue of $1.6bn, with a 12% CAGR through to 2025.
Entain also noted STS’ leading position in Poland, the strength of the existing leadership team and the future potential for the market to legalise online casino.
The operator additionally said it also expects the acquisition to be accretive to the company’s earnings in the first full year of ownership, with £10m in synergies set to be generated.
On the deal, Entain CEO Jette Nygaard-Anderson, commented: “We are delighted to be acquiring the leading sports betting operator in Poland, which is a hugely exciting and fast-growing market. STS is an exceptional business with a great brand, a compelling omnichannel offering and an outstanding CEO and management team.
“The transaction is perfectly aligned with our Entain CEE strategy and our wider M&A strategy of acquiring high-quality businesses with leading positions in attractive, growing and regulated markets. Expansion across Central and Eastern Europe remains a core component of our growth plans, and STS will be an integral part of our platform in that region.”
Mateusz Juroszek added: “I am very excited to be joining the board of Entain CEE and see significant growth opportunities in the Polish market for STS under Entain’s ownership. Entain is a world-class operator and has already made a significant investment in this region through SuperSport in Croatia.
“We could not have found a better partner to help us take STS into the next phase of its growth, and it is clear that Entain shares our ambition and vision for its future. I look forward to continuing to lead and grow STS, and to working in close collaboration with the Entain CEE team.”
Speaking about Entain’s latest acquisition move, Regulus Partners said: “While not cheap, a fair price is being paid for a very strong market position, which is hard to leverage outside Poland but which a global operator can leverage through a combination of scale, portfolio risk management and regulatory optionality. In short, we see Entain’s acquisition of STS as a high-quality, low-risk deal at a win-win price.
“Entain now has a strong position in Croatia (SuperSport) and Poland, owning both betting-led omnichannel local heroes in each market. Given that local heroes are very much a feature of the CEE region, it is not difficult to imagine a shopping list.
“However, Poland and Croatia are visible jurisdictions which had easily digestible components to gain [leading] market share status. The rest of the region tends to be rather more complex in terms of either scale, visibility or accessibility,” the consultancy added.