OPAP set to further increase stake in Stoiximan

Greek gambling operator OPAP Group has agreed to acquire an additional stake in Stoiximan Group’s Greek and Cypriot operations (SMGC), after securing approval to proceed with its initial acquisition of a larger holding in the business.

OPAP in January 2019 struck a deal to purchase a 51% stake in SMGC for a total consideration of €94.9m (£82.9m/$102.8m), with the deal granted approval from the Hellenic Competition Commission in November last year.

The Commission for the Protection of Competition of the Republic of Cyprus has now also cleared the deal, allowing OPAP to proceed with the acquisition.

In relation to the initial arrangement, OPAP has also agreed to take an additional 15.48% indirect stake in SMGC.

OPAP currently owns a 36.75% stake in Stoiximan Group through the brand's parent company TCB Holdings that was purchased in September 2018. OPAP will retain this stake and continue to provide online betting and other online gaming services outside of Greece and Cyprus – currently in Portugal, Romania and Germany – under the Betano brand.

Together with the 51% stake in the Greek and Cypriot business, plus the existing stake in the business, the purchase of the additional 15.48% stake sees it increase its total shareholding in SMGC to 84.49%. However, this remains subject to the requisite regulatory and competition approvals.

Should all sections of the acquisition secure approval, including the additional indirect stake, the aggregate net consideration planned to be paid in 2020 would be €163.4m, plus net cash.

In addition, subject to performance criteria set for the SMGC, the purchase would be subject to certain earn-out payments, calculated as a multiple of earnings before interest, tax, depreciation and amortisation differential for the years 2020 and 2021.

SMGC would continue to operate independently from OPAP’s online business, with the existing SMGC management team continuing to lead SMGC’s day-to-day operations. SMGC would continue to operate under the Stoiximan brand through a separate legal entity.

OPAP would also appoint directors to the board of the legal entity operating the SMGC business and, upon implementation of the sole control over SMGC, would assume control of this board.

“Building up OPAP’s presence in Online was a key element of our original 2020 Vision and in the last two years we have been steadily implementing our strategy of developing OPAP’s own online business while also taking an investment in the leading Greek online operator, Stoiximan Group,” OPAP chief executive Damian Cope said.

“Both have been growing rapidly during this time, albeit from very different bases, and so we are delighted to be announcing today that we are not only now able to conclude our previously announced investment but that we have also reached agreement with Stoiximan to further increase OPAP’s stake in their Greek & Cypriot operations.”

Stoiximan chief executive George Daskalakis added:: “Since OPAP’s initial investment 14 months ago, both Stoiximan and Betano have achieved impressive growth. This is the result of a strategic plan executed with consistency and professionalism by a team of more than 700 highly dedicated colleagues, whom I am honoured to lead.

“Today, OPAP's decision to increase its investment in Stoiximan, essentially fuels the prospects of our company in the future, but mainly constitutes a strong vote of confidence in our way of doing business.”

Earlier this month OPAP reported a 4.7% year-on-year increase in revenue for 2019, to €1.62bn, though it did not break out online performance in the results. The operator is expecting a significant impact from the novel coronavirus (Covid-19) pandemic, however, which it expects to reduce monthly gross gaming revenue by up to €140m, with earnings expected to fall between €50m and €53m while its effects are felt.