TORONTO, March 6, 2018 /CNW/ - The Stars Group Inc.
(Nasdaq: TSG; TSX: TSGI) announced today that it has entered into
definitive agreements to increase its equity interest in CrownBet
Holdings Pty Limited from 62% to 80% and for CrownBet to acquire
William Hill Australia Holdings Pty Ltd., creating a leader in the
regulated Australian online sports betting market. The aggregate
purchase price for both transactions will be approximately
$315 million, of which $234 million will be payable in cash for William
Hill Australia and the remainder will be payable in approximately
3.1 million newly-issued common shares of The Stars Group for the
increased equity interest in CrownBet. Unless otherwise noted,
references to "$" are to U.S. dollars and "A$" are to Australian
dollars
"These acquisitions will further increase our exposure to the
attractive regulated Australian sportsbook market and create a
player of scale and clear rival to the top two operators there,"
said Rafi Ashkenazi, Chief Executive Officer of The Stars Group.
"With complementary geographic profiles, we expect the combined
business to leverage CrownBet's operating and proprietary
technology platform and be well positioned for growth and to
navigate the ongoing regulatory and taxation changes in the
Australian market."
In 2017, William Hill Australia generated unaudited annual
revenues of A$190.5 million and
unaudited annual EBITDA of A$49.6
million, while CrownBet generated unaudited annual revenues
of approximately A$204.0 million and unaudited annual
EBITDA of approximately A$7.9 million. The Stars Group
currently anticipates the transactions will be accretive at a
combined valuation of approximately 12.1 times unaudited 2017
EBITDA of A$57.5 million before
anticipated synergies.
"I am excited to partner with The Stars Group," said
Matthew Tripp, Chief Executive
Officer of CrownBet. "We believe the acquisition of the William
Hill Australia business gives us the scale and customers to become
a leading force in the market and the tools we will need to prepare
for potential positive regulatory movement in other
jurisdictions."
William Hill's presence in the
Australian sports betting market evolved through the 2013
acquisitions of Sportingbet and tomwaterhouse.com. At the
time of its acquisition by William
Hill, the Sportingbet business in Australia included both Centrebet and a sports
betting business founded by Mr. Tripp and his family. Following the
acquisitions, William Hill changed
the brands to William Hill Australia and migrated all customers to
its platform.
CrownBet's management team, including Mr. Tripp, will operate
the combined business in Australia, which The Stars Group currently
estimates will realize gross cost synergies of approximately
A$50 million per year beginning in
2019 after a period of expected incremental integration and
rebranding costs. The Stars Group anticipates such synergies to
exceed the potential impact from expected point of consumption
taxes in Australia. The management
team of CrownBet will be entitled to an additional payment of up to
approximately $182 million in 2020
subject to certain performance conditions and payable in cash
and/or additional common shares at The Stars Group's discretion.
The Stars Group will retain its right to appoint a majority of the
directors on the board of directors of CrownBet.
To finance the cash portion of the purchase price for the
transactions, The Stars Group obtained committed financing for a
$325 million incremental first lien
term loan. Of the common share portion, approximately 64% of the
shares will be subject to transfer restrictions for a customary
period. The transactions are conditional on obtaining
approval by the Northern Territory Racing Commission and the
Australian Foreign Investment Review Board, and The Stars Group's
acquisition of the additional interest in CrownBet is conditional
on the acquisition of William Hill Australia. The issuance of The
Stars Group's common shares is also subject to approval by the
Toronto Stock Exchange. The Stars Group currently expects the
transactions to close in April
2018.
Macquarie Capital (USA) Inc.
acted as sole financial advisor to The Stars Group, Deutsche
Bank Securities Inc. and Macquarie Capital (USA) Inc. provided the committed debt
financing, and PJT Partners LP acted as financial advisor to
the Board of Directors of The Stars Group.
About The Stars Group
The Stars Group is a leading provider of technology-based
products and services in the global gaming and interactive
entertainment industries. Through its Stars Interactive Group
division, The Stars Group ultimately owns gaming and related
consumer businesses and brands, including PokerStars, PokerStars
Casino, BetStars, Full Tilt, and the PokerStars Players No Limit
Hold'em Championship, European Poker Tour, PokerStars Caribbean
Adventure, Latin American Poker Tour, Asia Pacific Poker Tour,
PokerStars Festival and PokerStars MEGASTACK live poker tour and
event brands. These brands together have millions of registered
customers globally and collectively form the largest poker business
in the world, comprising online poker games and tournaments,
sponsored live poker competitions, marketing arrangements for
branded poker rooms in popular casinos in major cities around the
world, and poker programming and content created for television and
online audiences. The Stars Group, through certain of these brands,
also offers non-poker gaming products, including casino and
sportsbook. The Stars Group, through certain of its subsidiaries,
is licensed or approved to offer, or offers under third party
licenses or approvals, its products and services in various
jurisdictions throughout the world, including in Europe, both within and outside of the
European Union, the Americas and elsewhere. In particular,
PokerStars is the world's most licensed online gaming brand,
holding licenses or related operating approvals in 17
jurisdictions.
Cautionary Note Regarding Forward Looking Statements
This news release contains forward-looking statements and
information within the meaning of the Private Securities Litigation
Reform Act of 1995 and applicable securities laws, including,
without limitation, as it relates to The Stars Group's acquisition
of an additional interest in CrownBet Holdings Pty Limited and
CrownBet's acquisition of William Hill Australia Holdings Pty Ltd.,
each as referenced herein, as well as certain expectations with
respect to the same and certain future operational and growth plans
and strategies. Forward-looking statements and information can, but
may not always, be identified by the use of words such as
"anticipate", "plan", "continue", "estimate", "expect", "may",
"will", "project", "predict", "potential", "targeting", "intend",
"could", "might", "would", "should", "believe", "objective",
"ongoing", "imply", "assumes", "goal", "likely" and similar
references to future periods or the negatives of these words and
expressions. These statements and information, other than
statements of historical fact, are based on management's current
expectations and are subject to a number of risks, uncertainties,
and assumptions, including risks associated with the transaction
referenced herein and potential future transactions, The Stars
Group's ability to realize expected benefits of the
transactions, market and economic conditions, business
prospects or opportunities, future plans and strategies,
projections, technological developments, anticipated events and
trends and regulatory changes that affect The Stars Group, its
subsidiaries, and its and their customers and industries. Although
The Stars Group and management believe the expectations reflected
in such forward-looking statements and information are reasonable
and are based on reasonable assumptions and estimates as of the
date hereof, there can be no assurance that these assumptions or
estimates are accurate or that any of these expectations will prove
accurate. Forward-looking statements and information are inherently
subject to significant business, regulatory, economic and
competitive risks, uncertainties and contingencies that could cause
actual events to differ materially from those expressed or implied
in such statements. Specific risks and uncertainties include, but
are not limited to, those identified in The Stars Group's annual
information form for the year ended December
31, 2016, including under the heading "Risk Factors and
Uncertainties", and in its management's discussion and analysis for
the three and nine months ended September
30, 2017, including under the headings "Risk Factors and
Uncertainties", "Limitations of Key Metrics and Other Data" and
"Key Metrics", each available on SEDAR at www.sedar.com, EDGAR
at www.sec.gov and The Stars Group's website at www.starsgroup.com,
and in other filings that The Stars Group has made and may make
with applicable securities authorities in the future. Investors are
cautioned not to put undue reliance on forward-looking statements
or information. Any forward-looking statement or information speaks
only as of the date hereof, and The Stars Group undertakes no
obligation to correct or update any forward-looking statement,
whether as a result of new information, future events or otherwise,
except as required by applicable law.
SOURCE The Stars Group Inc.