Lottomatica proposes €500m notes issue to help fund SKS365 acquisition

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The group struck a deal last week to acquire 100% of the share capital in the Italian-facing operator. Lottomatica said the agreement places a €639.0m enterprise value on SKS365.

Subject to securing anti-trust and regulatory approvals, the acquisition is due to complete in the first half of 2024. As part of its preparation for the deal, Lottomatica has now set out plans for a major bond issue.

This comprises floating rate senior secured notes due in 2030 and an additional 7.125% senior secured notes due in 2028. The latter are to be issued under the indenture of outstanding €565.0m 7.125% senior secured notes due in 2028.

The split between floating rate and additional notes will be communicated at completion of the offering together with final terms. Notes will be issued on or around the completion date of the SKS365 deal.

Additional €50m credit facility agreement

In addition, Lottomatica has secured additional commitments for revolving cash borrowings under an existing revolving credit facility agreement. This equates to an aggregate principal amount of €50.0m and is contingent on the SKS365 acquisition.

Lottomatica said gross proceeds from the notes and cash borrowings arrangement will be used to help fund the SKS365 purchase. This includes the acquisition fee and certain fees, costs and expenses in connection with the deal.

Funds will initially be deposited into escrow accounts and released when the acquisition completes. Lottomatica maintains its expectations that this will take place in H1 of next year.

Lottomatica plots growth trajectory with SKS365 deal

Upon announcing the deal last week, Lottomatica said that acquiring SKS365 will support its long-term growth strategy. This includes strengthening its position in Italy and expanding its brand portfolio and accelerate its growth profile. 

Omnichannel operator SKS365 has a strong online presence and runs approximately 1,000 retail sports betting points. It counts PlanetWin365 and PlanetPay365 among its brands.

Lottomatica CEO Guglielmo Angelozzi said that these brands would be “highly valuable and complementary” to the group’s portfolio. He added Lottomatica would support SKS365 in its next phase of growth.

Playtech’s loss is Lottomatica’s gain

Last week’s agreement seemingly ended Playtech’s hopes of acquiring SKS365. Playtech opened talks over a possible deal in September, while reports at the time also said Flutter and Lottomatica were interested.

Incidentally, Playtech was the only party to publicly declare its interest at the time. Both Flutter and Lottomatica remained quiet, with confirmation of the latter’s involvement only coming once a deal was reached.

Playtech last issued a statement acknowledging the deal. It did not say whether it would reopen talks or continue to pursue an agreement.

Earnings and revenue growth for Lottomatica in Q3

The acquisition agreement came on the back of a strong Q3 for Lottomatica, during which it reported revenue and earnings growth. Incidentally, Q3 was the first full quarter for the group after its IPO.

This followed a successful first half, after which Lottomatica increased its full-year guidance. The group confirmed this after Q3 growth.

For the full year, Lottomatica expects revenue of between €1.63bn to 1.69bn and adjusted EBITDA of €570m to €590m.

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