CVC sells Sky Betting & Gaming in $4.7bn deal

The cash and stock transaction completes a four-year ownership under CVC and will result in the world's largest publicly listed online gaming company, according to Stars Group.

CVC acquired the company in December 2014 via its CVC European Equity Partners V fund in a deal valuing the online betting and gaming company at £800m, according to Unquote Data.

With the acquisition of SBG, Stars Group intends to diversify its revenue base, with its mix of products now consisting of poker (37%), sportsbook (34%) and casino (26%).

Of the $4.7bn deal value, around $3.6bn is payable in cash and the remainder is payable in approximately 37.9 million newly issued common Stars Group shares. The new shares will represent around 20% of Stars Group's issued and outstanding common shares. 

The transaction values SBG at a multiple of 12.8x adjusted EBITDA over the last 12 months.

A debt package of $6.9bn has been obtained by the acquirer, including $5.1bn of first-lien term loans, $1.4bn of senior unsecured notes and a $400m revolving credit facility. The funded proceeds of $6.5bn will be used for the cash portion of the transaction consideration, refinancing the company's existing first-lien term loan and repaying SBG's outstanding debt.

Deutsche Bank Securities, Goldman Sachs, Macquarie Capital and Morgan Stanley provided the committed debt financing.

Previous funding
CVC acquired a majority stake in SBG in a deal valuing the online betting and gaming company at £800m in December 2014 via its CVC European Equity Partners V fund. The buyer stated the valuation represented a multiple of approximately 15x EBITDA at the time.

Following completion of the deal, UK broadcaster Sky retained a 20% stake in the business. SBG's existing management and employees also remained in place under the new ownership structure.

According to Unquote sister publication Debtwire, Goldman Sachs, Barclays and Royal Bank of Scotland arranged a £340m debt package to support the deal.

Company
Founded in 2001 as a subsidiary of London-headquartered broadcaster Sky, SBG is an online betting and gaming company. The business operates the Sky Bet, Sky Vegas, Sky Casino, Sky Poker and Sky Bingo brands.

SBG posted unaudited annual revenues of £624m and unaudited adjusted EBITDA of £202m in 2017. This represented a compounded annual growth rate of approximately 46% and 51% respectively over the prior two years, according to the company.

People
CVC Capital Partners – Pev Hooper (partner).
The Stars Group – Rafi Ashkenazi (CEO).  
Sky Betting & Gaming –  Richard Flint (CEO).
Sky – Jeremy Darroch (group CEO).

Advisers
Acquirer – Morgan Stanley (M&A); PJT Partners (M&A, debt advisory); Blake Cassels & Graydon (legal); Paul Weiss Rifkind Wharton & Garrison (legal).

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