BetMakers seals $41.3m Sportech acquisition in “supercharged” US drive

Sports betting supplier BetMakers has agreed a A$56.2m ($41.3m) all-cash deal to acquire fixed-odds and pari-mutuel betting supplier Sportech PLC.

The takeover includes Sportech’s pari-mutuel racing and digital businesses in the US, UK and in Europe, allowing BetMakers to accelerate its own US expansion plans following completion of the deal.

Approval for the acquisition has already been granted by Sportech’s board of directors but will subject to shareholder vote on December 21.

“BetMakers expects to derive strong growth from the business, including from synergies and cross-selling opportunities that become available from the Sportech assets in combination with the existing BetMakers business,” BetMakers said.

Under the terms of the agreement, BetMakers will pay a non-refundable A$11.2m ($8.2m) upon shareholder approval, with the balance being paid on completion.

To fund the acquisition, BetMakers plans to conduct a capital raising exercise in which the firm will issue 83.3 million new shares in the business, approximately 13.9% of the company’s total share capital.

Each share will be offered at a discounted price of A$0.60 ($0.44), with BetMakers confirming a potential A$50m ($36.8m) in new funds generated. However, the capital-raising exercise is entirely dependent on Sportech shareholders approving the deal.

BetMakers has said the combined group would have generated A$56.1m ($41.3m) in revenue during full-year 2020 with A$7.7m ($5.7m) in company EBITDA.

“This acquisition will supercharge our entry into the US and position the company for substantial growth on the back of the emerging wagering opportunities in US racing, including fixed odds, where we believe we are well placed,” said BetMakers MD Todd Buckingham.

“It will also greatly expand our global customer base across the UK, Europe and Asia and provides us with an opportunity to expand our product offering at scale in these and other regions.

“The acquisition of Sportech assets and the momentum we are seeing in the BetMakers business during this current financial year places the company in an extremely strong growth position,” Buckingham added.

In early November, shares in Sportech rose 34% following reports that US hedge fund Standard General LP had made several approaches to acquire the firm.

Sportech supplies betting technology used in 15,000 annual race meetings across 434 sites in 38 countries. In the US, Sportech operates in 36 states with 70 existing contracts to provide technology at more than 200 venues, including 25 white-label digital agreements and 9,000 betting terminals.

In Europe, Sportech operates agreements with major pari-mutuel providers including the UK Tote Group, Finland’s Veikkaus and Racecourse Media Group, as well as co-mingling agreements with 20 other operators worldwide.

Sportech operates seven offices across the UK, US, Ireland, Turkey, France and Germany.

It is expected that key management within the Sportech business will continue to work within the combined group’s pari-mutuel and digital businesses.