Sportech confirms talks on £97.3m sale of Football Pools

Sportech confirms talks on £97.3m sale of Football Pools

Tuesday, September 13, 2016 Posted by Andy McCarron
Consortium led by ex-COO Ian Hogg will seek AIM float

Sportech has confirmed it has entered into exclusive talks with a consortium headed by former chief operating officer Ian Hogg to buy the Football Pools business for £97.3m.

The move had been prefigured by an announcement last December when the pools operator confirmed it had been received a number of approaches.

Hogg is working with Burlywood Capital, where Sportingbet founder Mark Blandford is a partner, on the deal which hopes to float the Football Pools on Aim on acquisition. The buyout will be financed by a combination of equity injected by institutional investors and a new debt facility of up to £30m.

Sportech said the deal represents an “attractive opportunity to realise the value” of the pools business.

Alongside Hogg, who will be the chairman of the newly-listed entity, the current managing director of the Football Pools Conleth Byrne will join the new entity as chief executive and the current finance director of the Football Pools will join as chief financial officer. Also nominated to take up seats on the board are ex-888 chief executive Brian Mattingley and Liz Catchpole who will both take up non-executive roles.

Cenkos is acting as the financial adviser to the new company.

Neither company were willing to comment any further. The hope is that the proposed transaction will be completed later this year.

According to Sportech’s interim results for the six months to June, the Football Pools achieved EBITDA of £7m on total revenues of £14m. In 2015, the unit made total EBITDA of £15.2m on revenues of £33.8m. The transaction is equivalent to an EBITDA ratio of just over 6 times.

The new company won’t have to deal with the old paper coupon collection business which Sportech described as being logistically challenging and cost-intensive and which it closed earlier this year. The bulk of the Football Pools is now done through digital subscriptions, and before the new season the company launched its Football Pools app.

Total customer number continued to fall partly due to the collection channel closure, down to 220,00 from 234,000 in the first half of 2015. Over 60% of all subscribers now pay via direct debit. Total new player acquisition over the period was 10,000 with over half coming via digital channels.

Should the sale go through, Sportech will be cash-rich. As of June, it had net cash of £36.2m after having banked the VAT repayment money from the UK taxman. A final appeal with regard to the £93.3m VAT claim is still ongoing.

Totally Gaming says: A new home for the Football Pools and new hopes that the business can be more fully revived in the new digital landscape. A lot of hard work has been undertaken by Sportech to modernise the business and re-tool it for the 21st Century and the price-tag of the best part of £100m is a just reward for the work it has done. It will now be left to concentrate on its remaining, mainly US-facing, sports venues and racing pools business.

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