Kindred Group acquires outstanding shares in Relax Gaming for €295m

Kindred Group has reached an agreement to acquire the remaining 66.6% of outstanding shares in B2B igaming supplier Relax Gaming in a €295m (£253.4m) deal.

The Stockholm-listed operator will pay an initial €80m on completion, with maximum earn-out payments amounting to €113m and payable over the next two years, subject to certain earnings thresholds being met by Relax Gaming.

The transaction values Relax Gaming at up to €320m on a cash and debt-free basis.

Kindred has said the transaction will be financed through its existing cash and credit facilities.

Kindred Group CEO Henrik Tjärnström said: “Through this acquisition we add a rapidly growing and profitable B2B business with a world-class product portfolio, giving us greater control over our casino, poker and bingo offering.

“This puts Kindred in a significantly better position to achieve our long-term strategy to increase our focus on product differentiation and customer experience,” he added.

Kindred has invested in Relax Gaming since 2013 and was already the largest shareholder with a 33.4% stake and will become the 100% owner of the business following this share deal.

“The acquisition accelerates Kindred’s strategy to increase its focus on product and customer experience by strengthening Kindred’s product control and product differentiation capabilities,” the operator said.

Kindred will keep Relax Gaming as an independent entity within the wider organisation with a separate board of directors and management team in a move to “secure the continued integrity” of the firm’s B2B customers and contracts.

Kindred will continue to invest in the Relax Gaming business by strengthening its product offering and broadening its customer base.

Under the terms of the agreement, all existing employee share option programmes in Relax Gaming will be exercised, allowing Relax Gaming management to retain ownership of a 7% stake in the business.

Kindred will retain a 93% stake post-transaction once all options have been exercised.

The Relax Gaming management team will remain intact and will continue to be led by CEO Tommi Maijala, who previously spent more than three years as Kindred Group’s Malta CCO.

The acquisition is expected to generate annual synergies of €8m within the next three years, according to Kindred Group.

Relax Gaming recorded €25m in revenue and €10m in EBITDA to May 2021.

The B2B business currently supplies poker and bingo content on an exclusive basis to Kindred, along with online casino content. Relax Gaming operates an open distribution platform for third parties as well as its own proprietary poker and bingo products.

It was founded in 2010 and currently employs 240 members of staff across four main hubs in Malta, Estonia, Sweden and Serbia.

Assessing the deal, Regulus Partners analyst Paul Leyland said: “The deal as announced makes much of Relax continuing to operate separately from Kindred while also strengthening Kindred’s product control and ability to differentiate (slots and casino content, proprietary bingo and poker products).

“While possible, this is something of a strategic and operational tightrope. Ideally executed, Kindred gets the direct benefits of differentiation (especially localisation and features) while also fully capitalising on the content it is happy to see sold into the market.

“Less effectively executed and the Relax team gets sucked into Kindred vanity projects while undermining their quality and credibility as independent content producers,” he added.

Kindred Group’s share price increased by more than 7% in early trading on Nasdaq Stockholm to SEK146.85.