GVC disposes of Turkey-facing business for €150m
Five-year earn-out deal expected to be completed before the end of the year and could pave the way for more M&A by the operator
GVC Holdings is to sell its Turkey-facing business for up to €150m, potentially paving the way for more M&A as the operator looks to increase its focus on regulated markets.
The London-listed firm this morning announced the sale of its Headlong Limited subsidiary, and other companies that comprise its Turkish operations, for an earn-out consideration of up to €150m in cash.
The deal, which is expected to take place by the end of December 2017 and subject to regulatory and lender approval, will see GVC sell the business to Ropso Malta Limited – a company backed by investors currently providing the primary IT services to the business.
According to a statement this morning, Headlong and its associated businesses generated approximately €35m of clean EBITDA and had gross assets of €21m for the year ended 31 December 2016.
Today’s announcement will likely intensify speculation the operator is about to embark on another round of industry M&A.
GVC’s Turkey-facing business and grey market exposure, along with concerns surrounding a cap on FOBT stakes, is believed to have been a major reason why the operator’s merger discussions with Ladbrokes Coral broke down. The FT also reported last month GVC had agreed to dispose of the Turkey business as part of a takeover of Ladbrokes Coral.
Following completion of the deal, approximately 75% of GVC’s group net gaming revenue will be from regulated or locally-taxed markets.
“As the Group evolves, our focus is increasingly on regulated markets and markets where we believe there is a realistic path to regulation,” Kenny Alexander, GVC’s chief executive, said.
“Today’s disposal is consistent with this strategy and enhances GVC’s position as a leading operator in a rapidly developing industry.”
GVC this morning also announced another strong trading update with daily NGR up 26% (29% in constant currency) in October, attributed to a 13% gross win margin and new marketing campaigns.
The operator’s share price was up 0.79% to 945.50 on the London Stock Exchange at the time of writing.