Zeal makes bid for Lotto24 reunion

Zeal makes bid for Lotto24 reunion

Monday, November 19, 2018 Posted by News Team
Lottery brokerage aims to create new giant by re-acquiring business spun off in 2012

Online lottery brokerage Zeal Network has made a bid to acquire Lotto24, its former Germany-facing subsidiary. 

The deal is subject to an offer document, due to be published early in 2019, but would see Zeal make an all-share offer to acquire Lotto24. By doing so, it aims to create a digital lottery giant, estimating that it would generate combined annual billings of €500m, and have a customer base of more than 5m people. 

Lotto24 began life as a subsidiary of Zeal, before being spun off in 2012, becoming a separate entity listed on the Frankfurt Stock Exchange. 

“Zeal will reunite with Germany’s largest digital lottery broker,” Zeal chief executive Dr Helmut Becker said. “We will have a significantly enlarged, loyal customer base, strong technology and marketing platforms, and an exceptionally experienced team.”

“This transaction is good for shareholders, good for customers, and good for the German federal states and their lottery beneficiaries. We have held initial, constructive conversations with Lotto24 and look forward to further engaging with the management to achieve a successful combination of the businesses,” he continued. “We also look forward to a successful and constructive cooperation with Germany’s state lotteries and invite all shareholders to join us on this journey.”

Zeal says that it expects to make an offer of one new share for every 1.6 Lotto24 share, reflecting the ration of the volume-weighted average prices of the two companies over the past three months. 

It believes that the acquisition would deliver significant benefits to shareholders, estimating annual cost synergies of around €57m, and a reduced risk profile, as well as significantly growing revenue. Zeal plans to discontinue the secondary lottery business run by Lotto24’s Tipp24 subsidiary to focus on the less volatile lottery brokerage business. 

This would make Zeal a major player in Germany’s €8.7bn lottery market, complementing its operations in the UK, Ireland, Spain, Norway and the Netherlands. 

“We believe this deal creates significant value for ZEAL and Lotto24 shareholders,” Zeal chief financial officer Jonas Mattsson said. “The future growth prospects, significant reduction of regulatory risk and the related uncertainties, and €57m of annual cost synergies make the combined group a highly attractive long-term investment proposition. 

“With our shared history, we are confident of achieving a seamless integration of both companies. We encourage all holders of Lotto24 and ZEAL shares to follow the major shareholders and take part in the offer.”

The company has already secured commitments from Lotto24 shareholders, Günther Group, Working Capital and deputy chairman Jens Schumann to back the deal. Together they represent 65% of Lotto24’s issued share capital and voting rights.

Zeal is looking to secure shareholder approval for the deal at an extraordinary general meeting in December, before publishing the offer document early in 2019. Should the deal be approved by all stakeholders, it expects to complete the acquisition in the first half of 2019.


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