CVC Capital Partners beat off competing bids from Bain Capital and Apollo Global Management to buy 100 percent of the equity of the Sisal Group.
Sisal is Italy’s second largest gaming operator, with an extensive offline presence at “45,000 points of sale,” as well as online gaming through brands in the Italian regulated market.
The purchase price was €1 billion ($1.11 billion), less than LSR expected, and only 27 percent more than Sisal’s 2015 revenues of €787 million ($876 million). LSR did suggest that CVC would be “the most interesting potential owner.”
CVC wants more gaming sector exposure
CVC’s interest in gaming has been long-standing. In 1999 it bought UK operator William Hill, only to sell its stake in an IPO three years later.
In mid-2013, CVC attempted to buy Betfair, which has now merged with Paddy Power. The $1.5 billion on offer was not enough to satisfy Betfair’s directors, who rejected the offer.
The following year CVC successfully re-entered the gaming industry with the purchase of a controlling stake in the U.K.’s Sky Betting and Gaming in a transaction that valued the company at £800 million ($1.16 billion).
CVC will consolidate, develop and innovate
The purchase of Sisal adds enormously to CVC’s long position in the gaming industry, although Sisal’s other businesses mitigate the exposure. Sisal is the market leader in the provision of payment services in the Italian market.
Giampiero Mazza, partner and head of CVC’s Italian team, said:
“We are very pleased to have the opportunity to invest in Sisal. The Company is a well diversified entertainment business with a historical brand in Italy and strong market positions across gaming, lotteries, betting and convenience payments.”
He added that CVC intended to “consolidate Sisal’s leadership in the payments space, continue to develop its online gaming and betting platform and further innovate its proposition in proximity retail.”
Sisal CEO Emilio Petrone will remain in position after the deal. He commented:
“I would like to congratulate the entire CVC Milan Team for finalizing a great acquisition. Sisal, celebrating its 70th anniversary, is a very important Italian company that is enjoying a period of fantastic growth and overall results. I am confident that with CVC, we will make a formidable team enabling Sisal to fully exploit its potential, becoming even stronger and more competitive.”
Adding virtual sports betting is an obvious move
At its regulated online site, Sisal offers sports betting, poker, casino, slots lottery and bingo but it has not yet entered the virtual sports betting market.
Sisal’s major competitor in the Italian market is SNAI, which today announced that will offer virtual football betting after striking a deal with Inspired Gaming. Sisal could well add virtual sports this year, but now looks unlikely to have a product in place in time for the Euro 2016 football competition.
CVC’s next strategic step
Sisal is a major acquisition to digest, but as a company that understands brand value, CVC could still be attracted to buy Caesars Interactive Entertainment (CIE); if its parent Caesars Entertainment follows through with the announced intention to sell the unit.
CIE owns the WSOP brand, which although well known in the U.S., is less influential in Europe and Asia. CVC owns the Formula 1 motor racing brand, which is one of the most valuable sporting brands in Europe and Asia.
CVC may also be attracted by CIE’s phenomenally successful social gaming business. CVC’s current gaming holdings don’t include a major social gaming venture, and CIE could easily fit the bill.
CIE’s rumored purchase price of over $4 billion is within CVC’s funding capacity, but may look too rich even given CIE’s current rate of growth.