Sky has agreed to sell its 20% stake in the online betting and gaming business, Sky Betting & Gaming (“SBG”) to The Stars Group Inc. (“The Stars Group”), a Canadian company listed on both the Toronto and Nasdaq stock exchanges, which specialises in online gaming.
This disposal follows the initial sale of Sky’s majority stake in SBG to CVC Capital Partners (“CVC”) in 2015 which, taken together, will crystallise a total value of c.£1.2bn for Sky shareholders.
Today’s transaction will see Sky receive c.£425 million cash and 7.6 million newly issued shares or approximately 3% of The Stars Group post completion of the deal, worth approximately £145m. Sky will use the proceeds to reduce debt and reinvest in further growth opportunities.
Formed by Sky in 2001, SBG grew rapidly to become one of the leading operators in the UK’s online betting and gaming markets, benefiting from a strong partnership with Sky Sports and Sky’s technology and product innovation expertise. After selling 80% to CVC in 2015 Sky continued to work closely with its partners at CVC and the SBG management team to drive the further development of the business. As part of the transaction, Sky will continue to license the Sky Betting & Gaming brand to The Stars Group.
The transaction is part of a transaction under which CVC will sell the whole of its stake in SBG to The Stars Group.
The transaction is subject to customary regulatory clearances.
Jeremy Darroch, Group Chief Executive Officer of Sky, commented:
“We are proud of what we have achieved from a standing start with Sky Betting & Gaming, crystallising over £1 billion in value for shareholders. The ability to create innovative products and successfully challenge for share in completely new markets has become a pattern at Sky and gives us the continued confidence to open up new opportunities and invest for future growth.”
Lazard is acting as exclusive financial adviser to Sky on the transaction.
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Notes to editor
The net impact of the transaction to Sky’s Group earnings is expected to be slightly positive in fiscal 2019 and thereafter.
The 7.6 million newly issued The Stars Group shares will be valued using The Stars Group’s prevailing share price at the date of completion. A gain on disposal will be recognised in the income statement based on the difference between the value of the total consideration received and the carrying value of the Group’s investment in SBG. The shares will be recognised as an available-for-sale investment on the Group’s balance sheet, and will be “marked to market” each month, with movements in fair value being recognised in reserves.
Sky received cash of £600 million on completion of the sale of SBG in 2015 and received a further £196m thereafter from a vendor loan payment note and recapitalization of the SBG business. Sky also retained a 20% stake in SBG.
Sky is Europe's leading entertainment company, serving 23 million customers across seven countries - UK, Ireland, Germany, Austria, Italy, Spain and Switzerland. The company has annual revenues of £12.9 billion and is Europe’s leading investor in television content with an annual programming spend of £7 billion.
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About The Stars Group
The Stars Group is the owner of the “Pokerstars” brand which is the number one global online poker site, with over 115m registered customers.