Entain Ready to Purchase Polish Gaming Operator STS Holding After Selling Equity

Posted on: June 15, 2023, 07:42h. 

Last updated on: June 15, 2023, 10:22h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Global online gaming giant Entain recently announced that it has been working on a deal to purchase STS Holding, the largest sports betting operator in Poland. It has now completed its mission, but at the expense of company shares.

STS Holding's sign on a building
An STS Holding sign on a building. Entain is buying the Poland-based sports betting operator in a nine-figure deal. (Image: STS Holding)

In order to finance the acquisition, Entain had to turn to investors for some of the money. In doing so, it turned to institutional investors, offering about $750 million in company equity at a discount of 7%.

It seems like a smart move, given the projections for the Polish gaming market. The sports betting market, according to Entain, should see annual growth of about 12% over the next two years. In addition, if Poland advances online gaming legislation, STS will be able to jump into that space as well.

In the meantime, Entain is going to have to deal with a major shift in its stock price. From Tuesday afternoon to Wednesday morning, it lost about $202 a share.

A Billion-Dollar Gamble

Entain said that it’s paying about $568.93 million cash to buy STS, which went public on the Warsaw Stock Exchange in 2021. It expects the investment to have paid off after the first full year.

STS CEO Mateusz Juroszek is going to take part of the money he would earn from the acquisition and reinvest it into Entain CEE. This will give him a 10% stake in the venture. He will also keep his position at the helm of STS, while also taking a seat at the Entain CEE Board of Directors table.

Juroszek’s father also stands to benefit from the acquisition. Zbigniew Juroszek has a stake in STS that — along with his son’s holdings — amounts to about 70% control of the company.

Analysts like the deal, with betting consultancy Regulus Partners acknowledging that Entain paid a “fair price” for the acquisition. It referred to the purchase as a “high-quality, low-risk deal at a win-win price.”

Entain shareholders, however, weren’t so pleased. On the London Stock Exchange, Entain closed at £1,321 (US$1,670) on Tuesday before dropping to £1,184 (US$1,496) on Wednesday morning. It has since recovered slightly, to £1,209 (US$1,528) at press time.

It’s a different story for STS, however. On Tuesday, it was at PLN20.30 (US$4.92) before climbing to PLN24.15 (US$5.85) on Wednesday. Now, it’s at PLN23.95 (US$5.80).

Further Expansion Coming

Entain’s Central and Eastern Europe arm, Entain CEE, and EMMA Capital, will cover the total cost of the STS acquisition based on their respective ownership stake in Entain CEE. Entain CEE controls roughly 75%, while EMMA Capital controls the rest.

Last year, Entain created Entain CEE specifically to target expansion in the European markets. One of its first purchases was SuperSport Group, a sports betting operator in Croatia that holds a grip on about 50% of the market.

The company also sees a bright future ahead in New Zealand with Tab NZ, despite a bumpy start. Dean Shannon, CEO of Entain Australia and New Zealand, recently pointed out the advantageous status of Tab NZ in the country and what it means for the future of gaming.

Entain took over Tab NZ in May. It expects to see huge rewards as a result, with the regulated gaming market already responsible for around NZ$600 million (US$367.5 million) in annual revenue.

This is just the beginning, however, as Shannon thinks it can take the company to a new level. He foresees growth of around 35% over five years, which would result in a market value of around NZ$800 million (US$490.09 million).

Furthermore, the Tab NZ platform is set to benefit from the incorporation of Punter Assist, a secure suite of gambling solutions Entain has put together. This integration promises to elevate the overall quality of the betting and gaming experience in New Zealand.