In June, Kindred Group announced it has obtained a gaming license for the Netherlands Towards the end of the same month, the group inked a deal with AFC Ajax via its Unibet brand.
Now, the group is allegedly considering a few valid sale options. Giants 888 and Entain count among the names that could ink a deal with Kindred. It all started a few months ago when Corvex Management turned into the group’s second-largest shareholder. Kindred’s chairman Evert Carlsson originally opposed the idea, expressing confidence in the brand’s growth strategy.
Big Names on the List of Prospective Buyers
Kindred’s board has been apparently assessing several prospective buyers. The list includes important names in the industry such as 888, Entertain, and Tipico. The list is completed by a number of private equity businesses like Blackstone and Apollo Global. Apparently, Kindred has not yet found the right name to pursue the opportunity. As for the operators involved in the potential acquisition deal, their common conclusion was that Kindred did not manage to accurately upgrade its business model following the continuous regulation of global markets. Therefore, none of the previously mentioned operators considered the group would represent a good value for acquisition.
Kindred’s shares are now traded at SEK77.66 ($7.59). This gives Kindred a market capitalization of SEK17.64 billion ($1.72 billion). The group’s earnings before interest, tax, depreciation and amortization for 2021 reached $113.2 million, representing around one-fifteenth of the total market capitalization.
More Progress May Be Needed
While Kindred emphasized its focus on entering more regulated markets in the past few years, more progress and additional management changes might be necessary. Another factor going against a potential acquisition is the large size of the sale that would force operators to raise their debt and prevent them from moving forward.
As for the private equity sector, such an acquisition would trigger numerous regulatory difficulties related to owning such a massive gambling business. Plus, the group’s attempt to create its own sportsbooks apparently added more to the general uncertainty expressed by potential buyers.
Corvex Expected to Speed Up the Process
While a sale is less likely to pop in the near future, Corvex Management may decide to take additional steps to speed up a deal by asking for a change in management or by urging the board to make an acquisition. Nonetheless, neither of these steps would be able to offer a guarantee for a future deal with any of the operators.