FDJ Nears Roughly $2.5 Billion Deal for Kindred Group
The French lottery operator Française des Jeux is in talks to acquire its Stockholm-listed rival, a win for Keith Meister’s Corvex activist fund
La Française des Jeux FDJ 1.48%increase; green up pointing triangle is in talks to acquire Kindred Group KIND -0.95%decrease; red down pointing triangle for around $2.5 billion, according to people familiar with the matter, in a deal that would create one of Europe’s biggest online gambling companies.
A deal could be announced as soon as Monday, assuming talks don’t break down, the people said. It would follow calls for the possible sale of the Stockholm-listed company by Corvex Management, a New York activist investor headed by Keith Meister.
Based in France, La Française des Jeux, or FDJ, is known as the country’s exclusive lottery and offline sports-betting operator. It also offers online sports betting and online gambling activity. The company, which is listed in Paris, reported a 6% jump in half yearly profit through June to almost €1.3 billion, equivalent to $1.4 billion, led by its lottery business.
The deal, if completed, would fit with FDJ’s ambitions to expand internationally, diversifying its sources of revenue and gaining greater scale to compete against larger operators such as U.K. listed Entain and Dublin-based Flutter Entertainment.
In November, FDJ acquired Ireland’s national lottery operator, Premier Lotteries Ireland for €350 million, including debt.
Kindred, which had a market value of more than $2.1 billion as of Friday, was founded in 1997 and oversees nine gambling brands. They include Unibet, which offers sports betting, casino activities, poker and bingo across more than 100 countries and Highroller, which caters to gamblers who want to make big casino bets, according to the company’s website.
In November, the company said it would withdraw from North America to redirect resources to its more core markets in Europe as part of a plan to boost profits.
Kindred would expand FDJ’s sports-betting and casino online-gambling operations in several other European markets including the U.K., France, Italy, the Netherlands and Sweden, as well as in Australia.
Corvex, the hedge fund, is a major shareholder of Kindred, owning 15%, according to Kindred’s website. Corvex disclosed an initial stake late April 2022, calling for Kindred to consider a sale as part of a strategic review to boost the company’s stock price.
That move came weeks after Kindred’s stock price sank following the company’s report of a 30% decline in quarterly revenue because of an earlier decision to temporarily withdraw services from the Netherlands.
Corvex then added to that position over the next few months and subsequently gained a board seat to push for changes.
The poor performance of some gambling stocks in Europe has made them a target for activists. In December, Corvex disclosed more than a 4% stake in London-listed Entain because of its weak stock price, arguing the company had to consider “all options” to boost value.
In January, Entain appointed Ricky Sandler, chief executive of activist investor Eminence Capital, to its board.