Scientific Games to Pocket $1.2b for Sale of OpenBet to Endeavor
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Scientific Games to Pocket $1.2b for Sale of OpenBet to Endeavor

Scientific Games to Pocket $1.2b for Sale of OpenBet to Endeavor

Scientific Games Corporation has agreed to sell its sports betting business, OpenBet, to Endeavor Group Holdings, for $1.2 billion. 

Under the terms of the agreement, Scientific Games will receive $1 billion in cash and $200 million in Endeavor Class A common stock based on the volume-weighted average trading price of the Class A Common Stock. The transaction is expected to close in the second quarter of 2022, subject to regulatory approval.

 

Significant milestone

Barry Cottle, President and Chief Executive Officer of Scientific Games, described the deal as a “significant milestone.”

Cottle said: "This transaction represents the culmination of a thorough process to divest OpenBet in order to maximize value for our shareholders and rapidly advance our vision to become the leading cross-platform global game company. The transaction is a significant milestone towards optimizing our portfolio and de-levering the balance sheet to enhance our financial flexibility. It will position us to invest both organically and inorganically in key growth areas, particularly in content and digital markets. We are delivering on our promises and executing on our strategy to transform our company and unlock significant value for employees, customers and shareholders."

In July, Scientific Games, a major slot machine maker, announced its plans to divest its lottery and sports-betting businesses to deleverage and pivot to a gaming and digital content provider.

At the time, Scientific Games said it was evaluating strategic alternatives to execute the divestitures for each business, respectively, including an initial public offering or a combination with a special purpose acquisition company or a sale or a strategic combination with another business.

“Sci Games’ decision to divest the lottery and sports betting businesses would leave the company with Gaming, iGaming, and SciPay businesses, enabling it to focus on its land-based and digital markets, which have a large total addressable market and opportunity for growth. We expect the company to focus on content franchises utilizing a cross-platform gaming approach, leveraging content creation investments and enabling player trends,” Moody’s said in its analysis of the transaction.

 

Strategic addition

On its end, Endeavour said the acquisition of OpenBet will complement the company’s position within the sports betting ecosystem, currently anchored by IMG ARENA, which works with more than 470 leading sportsbook brands worldwide to deliver official live streaming video and data feeds for more than 45,000 sports events annually.

The combination of OpenBet and IMG ARENA will create a unique end-to-end solution, delivering official data and video streams, premium content, cutting-edge mobile products and best-in-class betting technology solutions to leagues, federations and sportsbooks worldwide, a statement said.

“OpenBet marks a strategic addition to our sports betting portfolio as we look to round out our technology and product offering for sportsbook operators and sports brands worldwide. The combination of OpenBet and our IMG ARENA business will enable us to expand our footprint across the entire sports betting value chain and further capitalize on the tremendous upside we see coming from this fast-growing global industry,” said Ariel Emanuel, CEO, Endeavor.

Reuters reported that there had been a growing demand for online betting during the pandemic, as punters took to playing from home when casinos and betting shops were off-limits. Recently, British gambling firm Entain said it had received a takeover proposal from U.S. fantasy sports betting company DraftKings valuing it at $22.4 billion. 

The demand for online casino games is likely to continue growing particularly in North America, as regulations on gaming are relaxed.


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