FDJ Explores Blockbuster $2.5B Deal to Acquire Kindred Group

France’s premier lottery and sports-betting operator, La Française des Jeux (FDJ), is on the verge of clinching a monumental deal to acquire the Stockholm-listed Kindred Group for approximately $2.5 billion. 

Kindred Group Purchase Signals Ambitious Online Gambling Expansion for FDJ

FDJ, a dominant force in France’s lottery and offline sports betting arena is seeking to bolster its position in the highly competitive online gambling sector, reported The Wall Street Journal.

The acquisition of Kindred Group, with a market value exceeding $2.1 billion, is seen as a strategic move to establish FDJ as one of Europe’s largest online gambling entities.

The French company has been actively pursuing international expansion, evident from its acquisition of Ireland’s Premier Lotteries Ireland in November 2023 for €350 million ($381.6 million). The potential Kindred deal aligns seamlessly with FDJ’s global ambitions, providing a diversified revenue stream and heightened competitiveness against industry giants like Entain and Flutter Entertainment.

Kindred Group, founded in 1997, manages nine renowned gambling brands, including Unibet and Highroller, serving customers across more than 100 countries. The company’s decision to exit North America and refocus on core European markets has paved the way for FDJ to extend its influence in key regions like the UK, France, Italy, the Netherlands, Sweden, and Australia.

Corvex’s Push for Change Sparks Transformative Moves in Gambling Giants

Corvex Management, a New York-based hedge fund with a 15% stake in Kindred, has played a pivotal role in advocating for the acquisition. Corvex initiated its involvement in April 2022, urging Kindred to explore strategic alternatives to enhance shareholder value. The hedge fund’s push for change gained momentum as Kindred faced a 30% decline in quarterly revenue, prompting a reconsideration of services in the Netherlands.

The European gambling sector has recently become a focal point for activist investors. Corvex, not only involved in the Kindred deal but also having disclosed a 4% stake in Entain in December, emphasizes the need for companies to explore all options to boost stock value.

This follows Entain’s appointment of Ricky Sandler, CEO of activist investor Eminence Capital, to its board earlier this year.

The FDJ-Kindred deal is anticipated to send ripples through the financial markets, with potential consequences for investors and stock prices. Despite FDJ’s challenges in the lottery segment during Q3 2023, the company’s strategic acquisitions, including the impending Kindred acquisition, are expected to fortify its portfolio and offset losses.