The Stars Group Merger and Acquisition Strategy Pays Dividend
The Stars Group have announced full-year results for the group which show total revenues top £1.9bn. Boosted by the company’s merger and acquisition strategy, revenues increased by 24.6% year-on-year.
The Stars Group acquisition of Sky Betting & Gaming (SBG) in the UK and Bet Easy in Australia paid dividends with both brands performing well in their respective markets.
Sky Bet’s revenues of £734.7m represented a 140.2% YoY increase on 2018’s figures of £307.11m. The UK poker market is performing strongly for the group’s gaming and revenue businesses with a 96.4% upturn in revenues.
The group state they will be expanding the range of its products to other markets with Italian and German markets a focus for the Sky Bet brand. The company plan to use expertise from operations in the UK to enable this expansion.
The Australian market’s revenues increased by 39.3%. Bet Easy’s 2018’s figure of £153.44 increased to £212.9m. The improved trading figures in Australia and the UK helped the group offset a drop in international revenue. The latest figure of £1bn is 8.9% lower than 2018’s £1.12bn. The Stars Group fourth-quarter and full-year results show healthy underlining figures. Gross profit increased by 16.9% to £1.3bn, and operating income of £204.9m represents a 1.6% increase YoY.
The company’s net earnings enjoyed triple-digit growth, turning a 2018 £84.16m loss into a positive net figure of £47.9m.
The company revealed that they had a $100 million run-rate of expected cost synergies coming into 2020 and have also prepaid an additional $100 million of debt which the company state will allow them ‘to execute on complex integrations and the highly cash-generative nature of our business model’.
The debt from the Sky Bet purchase and the setting aside of funds affected the company’s earnings before interest, taxes, depreciation, and amortisation figure. Although the EBITDA increased to £714.9m, a rise of 17.9%, the EBITDA margin fell from 38.5% in 2018 to 36.4%.
Rafi Ashkenazi, The Stars Group’s Chief Executive Officer, said the results showed that the company was seeing the full-year benefits of their ‘transformative 2018 acquisitions’. The CEO added that The Stars Group launch of FOX Bet would strengthen the company’s position in the emerging American market.
Ashkenazi also revealed that sports betting now the company’s largest product vertical and stated that 81% of revenues were coming from locally regulated or taxed markets.
The Stars Group’s positive trading figures will make for good reading for the Flutter Group who
The deal, when completed, will create what the two companies claim will be the largest online betting and gaming operator in the world. The merger is likely to see figures of over £4bn a year in revenue, EBITDA figures of £1,1bn and combining resources to service the 13 million customers is expected to save the companies over £140m per year in pre-tax cost synergies.