Is Kambi An Acquisition Target With ‘Poison Pill’ Issue Resolved?

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Kambi poison pill

The US sports betting M&A market gained a potentially interesting new participant Tuesday.

Sportsbook supplier Kambi announced it was rid of the so-called ‘poison pill’ that hindered the company from being acquired.

Kambi was spun out of Kindred as as the operator’s sportsbook technology arm in 2014.

Kambi poison pill background

As part of that spinoff, Kindred took an $8.5 million convertible bond in Kambi. Subsequently, Kindred had the power to convert that bond into shares and take a controlling influence over Kambi.

That power always dampened any acquisition talks for Kambi because Kindred could convert the bond and nix a deal.

However, Kambi announced Tuesday it had “satisfied certain financial performance criteria set out in the bond agreement”.

Full strategic control

The supplier can now prepay the full loan amount and exit the bond agreement anytime it chooses.

“This ensures Kambi and its shareholders have complete control of the company’s strategic direction,” the supplier said in a statement.

Kambi declined to comment beyond the statement in its release.

Kambi poison pill sparked a bidding war?

The announcement sparked immediate speculation that Kambi was looking at potential suitors.

Mathias Svensson, a portfolio manager at Keel Capital and Kambi shareholder, speculated the supplier might already have bidders.

For one, the announcement was made alongside a three-year extension to Kambi/Kindred’s sportsbook supply deal.

The new deal will kick in when the old one expires at the start of January 2024.

“Calling an extension two years early makes no sense for Kindred,” Svensson said. “So the deal was undoubtedly initiated by Kambi and a bidder has likely emerged.”

Kambi an important player in Super Bowl betting

That might be premature, but Kambi is undoubtedly an interesting asset. It will power several major US sportsbooks for Sunday’s Super Bowl betting, including:

Eilers & Krejcik noted in a recent product report that Kambi had “cemented itself as the third-party sports betting module supplier of choice” in the US. 

“We note that in 4Q21, Kambi powered three of the top 10 apps in our overall rankings,” Eilers said.

Who might want to buy Kambi?

Those existing US sportsbook partners could make sense as potential buyers.

What’s the asking price?

Kambi is currently worth around $800 million on the Stockholm stock exchange, suggesting a ~$1 billion price tag with a buyout premium.

The stock climbed 8% Wednesday following the announcement.