Zeal shareholders approve Lotto24 acquisition bid

Zeal shareholders approve Lotto24 acquisition bid

Friday, January 18, 2019 Posted by News Team
Approved
Lottoland continues to voice opposition to proposed takeover

Shareholders of London-listed lottery brokerage Zeal Network have voted in favour of necessary preconditions for the company’s disputed takeover offer for its former subsidiary Lotto24.

At the meeting, which has held despite lottery betting operator and Zeal shareholder Lottoland calling for its postponement, 60% of shareholders voted in favour of the required capital increase to facilitate the all-share deal.

Shareholders also waived the requirement for Günther Group to make a full takeover offer for the combined business, with 51% voting in favour of this move. The investment vehicle will own 30% of the combined Zeal and Lotto24 business, meaning that under German company law it would have been required to file a bid to take full ownership of the new entity. Günther Group was not able to vote on this resolution.

“Our plan to reunite Zeal and Lotto24 offers a fantastic opportunity for sustainable growth and creates significant value - for shareholders of both companies, customers and the German Federal States and their lottery beneficiaries,” Zeal chief executive Dr Helmut Becker (pictured) said.

“We are pleased that Zeal’s shareholders share our vision and today approved the important preconditions which now enable us to make our offer for Lotto24,” he continued. “We look forward to launching our offer to Lotto24 shareholders shortly and to bringing our organisations together.

Plans for the acquisition, which would see Zeal retake control of the subsidiary that was spun off in 2012, were first announced in November 2018. The deal aims to create a lottery brokerage giant, with billings of around €500m (£440.7m/$570.1m), a customer database of five million and a diversified international footprint.

It will also see Zeal pivot its Germany-facing Tipp24 lottery betting business into brokerage following the Lotto24 combination.

However, the acquisition has been attacked by Lottoland, which claims the deal will only benefit a small number of shareholders, and destroys value for the majority of investors. The lottery betting giant first attempted to have today’s Extraordinary General Meeting delayed - something Zeal said would force it to withdraw its offer - then lodged a €76m bid for Zeal’s Tipp24 business.

This offer was rejected by Zeal, which said the bid significantly undervalued its German business, and would strip the business of its most valuable asset.

Having secured shareholder approval for the Lotto24 acquisition, Zeal will announce the beginning of the acceptance period for the takeover once its Offer Document is approved by the German Federal Financial Supervisory Authority (BaFin). It expects the acceptance period to begin by the end of January.

Reacting to the news, Lottoland said the fact that just 51.43% backed a motion to waive a requirement for Günther Group to make a full takeover offer for the combined Lotto24 and Zeal business suggested the company had failed to secure a mandate to proceed with the deal. 

Investment vehicle Günther Group would hold 30% of the combined entity's share capital, which would require it to make an offer to acquire the remaining 70% of shares without this waiver.

Lottoland chief executive Nigel Birrell (pictured) noted that had Lotto24 shareholders not had a vote, this resolution would not have passed.

“This highlights what we have expressed all along - the Lotto24 shareholders are the only ones that will benefit from this transaction; and that the transaction is value destroying for Zeal shareholders,” he said.

However, Birrell hinted that Lottoland – which holds a 5.5% stake in Zeal – could now move on from its dispute of the deal, saying the company will continue to look at other M&A opportunities and to consolidate its position in the market.

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