Entain agrees deal to acquire Poland’s STS

London-listed Entain has entered into an agreement to acquire Polish betting operator STS Holdings for a total consideration of £750 million.

Entain has launched a tender offer to acquire 100 per cent of STS at a purchase price of PLN24.80 per share through Entain CEE, the company’s venture in Central and Eastern Europe with partner EMMA Capital.

The offer represents a 35 per cent premium to the 6-month volume weighted average price of PLN18.33, and a 20 per cent premium to the spot price of PLN20.75 as at 12 June.

Entain and EMMA will fund the offer in proportion to their current shareholding in Entain CEE (75 per cent/25 per cent respectively), via an equity placing and a separate retail offer through the PrimaryBid platform, which is expected to raise gross proceeds of £600 million.

“We are delighted to be acquiring the leading sports-betting operator in Poland, which is a hugely exciting and fast-growing market. STS is an exceptional business with a great brand, a compelling omnichannel offering, and an outstanding CEO and management team,” said Entain CEO Jette Nygaard-Anderson. “The transaction is perfectly aligned with our Entain CEE strategy and our wider M&A strategy of acquiring high quality businesses with leading positions in attractive, growing and regulated markets.

“Expansion across Central and Eastern Europe remains a core component of our growth plans, and STS will be an integral part of our platform in that region.”

STS CEO Mateusz Juroszek and his father Zbigniew Juroszek, who through their respective family foundations collectively hold approximately 70 per cent of STS’ share capital, have entered into a binding agreement to irrevocably accept the offer.

Following completion, the Juroszek Foundations will re-invest a proportion of their proceeds into Entain CEE in return for a 10 per cent economic stake in Entain CEE.

The net cash consideration of the acquisition payable by Entain will be £450m.

Following the Juroszek Foundation’s investment, Entain CEE’s economic rights will be approximately 67.5 per cent owned by Entain, 22.5 per cent owned by EMMA Capital, and 10 per cent owned by the Juroszek Foundations.

Up to half of the 10 per cent stake owned by the Juroszek Foundations is subject to clawback by Entain CEE should STS not achieve certain financial hurdles in 2023.

There are also options over the shares held by the Foundations and EMMA, giving Entain a path to 100 per cent ownership, exercisable by Entain four years from closing and exercisable by other shareholders from November 2025.

“I am very excited to be joining the board of Entain CEE, and see significant growth opportunities in the Polish market for STS under Entain’s ownership,” said STS CEO Mateusz Juroszek. “Entain is a world class operator and has already made a significant investment in this region through SuperSport in Croatia.

“We could not have found a better partner to help us take STS into the next phase of its growth, and it is clear that Entain shares our ambition and vision for its future. I look forward to continuing to lead and grow STS, and to working in close collaboration with the Entain CEE team.”

Listed in Warsaw, STS is Poland’s leading sportsbook with 400 retail stores and a strong online business, generating net gaming revenue (NGR) of PLN663 million and adjusted EBITDA of PLN273 million in 2022. The online business accounted for 82 per cent of revenue, with total active users reaching 783,000 at the end of last year.

With the addition of another leading business to Entain CEE, the transaction is expected to provide more than £10 million in run-rate synergies.

Mateusz Juroszek will remain as CEO of STS and join the board of Entain CEE. He has been CEO of STS since 2012 and has been critical in driving STS’s growth over the last decade.

Radim Haluza, CEO of Entain CEE, will continue to drive and oversee the continued success of both STS and SuperSport.

Shares in Entain plc (LSE:ENT) were trading 10.18 per cent lower at 1,187.00 pence per share in London earlier Tuesday, while shares in STS Holding SA (WA:STH) were up 12.09 per cent at PLN24.10 in Warsaw.