Following an announcement about a CrownBet acquisition last week, Canadian gambling company The Stars Group announced on Tuesday it is now increasing its equity interest in CrownBet Holdings Pty Limited to 80%. The online gambling giant also confirmed the signing of a definitive agreement for the William Hill Australia Holdings Pty Ltd. acquisition by the rapidly growing online sportsbook CrownBet.
With this move, The Stars Group is looking to quickly enter the regulated Australian sports betting market, creating a gambling operator that would be competitive enough to become a rival to the local industry leaders. In a press release, Rafi Ashkenazi, Chief Executive Officer of The Stars Group, also explained that the Canadian giant expects the merged company to be well-prepared for the taxation and regulatory changes currently taking place in Australia.
Earlier on Tuesday, it became clear that the local division of UK bookmaker William Hill has sold its entire business to one of its biggest competitors, CrownBet, for AU$300 million. There have been talks between the two operators for a merger for at least a month, according to an official announcement in January by William Hill. Last week, The Stars Group acquired the 62% majority stake in CrownBet, one of the most promising Australian online sportsbooks. The deal between the Canadian gaming giant and Crown Resorts Limited was signed for AU$150 million, or approximately $117.7 million.
According to the new agreement for an increased equity share in CrownBet – from 62% to 80%, and for CrownBet to acquire William Hill Australia Holdings Pty Ltd., the total purchase price will be approximately $315 million. The official press release from The Stars Group adds that $234 million will be payable in cash for William Hill Australia. The rest of the funds, around $80 million, will be payable in approximately 3.1 million newly-issued common shares of The Stars Group for the increased shares in CrownBet.
The Combined Business in Australia Expected to Grow into a Leading Sportsbook
The combined sports betting division in Australia will be operated by CrownBet’s management team lead by the sportsbook’s CEO Matthew Tripp. According to preliminary estimates by The Stars Group, the merged entity will realize annual gross cost synergies of approximately AU$50 million. These figures are expected to show no earlier than 2019. In addition, based on the performance displayed in the following few years, the management team of CrownBet may receive an additional payment of up to approximately $182 million in 2020.
The fast growth market strategy of CrownBet is only one of the many aggressive expansion steps the Canadian group has made in recent months. With the full integration of William Hill Australia assets, The Stars Group, which is already one of the world’s leading online gambling companies, is aiming to grow its exposure in the Australian sports wagering market. Since it is fully regulated and certain legislative and regulatory changes have taken place in the past year or so, many leading international sportsbooks have already left the country, including one of the largest betting brands in the UK, William Hill.