Cohn Robbins SPAC Reportedly Holding Talks with Lottery Firm Allwyn

Posted on: December 21, 2021, 10:11h. 

Last updated on: December 21, 2021, 11:07h.

European lottery operator Allwyn is rumored to be in merger discussions with Cohn Robbins Holdings (NYSE:CRHC). That’s a special purpose acquisition company (SPAC) led by President Donald Trump’s former chief economic adviser.

Allwyn SPAC
Former White House economic adviser Gary Cohn, seen above. His SPAC is rumored to be in talks with lottery operator Allwyn. (Image: Bloomberg)

Unidentified sources told Bloomberg the blank-check company is looking to raise private investment in public (PIPE) to execute the deal. Terms of the potential transaction haven’t been made public, and it’s believed that if an agreement is struck, it won’t be announced until January.

llwyn is primarily focused on national lottery games, instant lotteries and online lotteries and has a secondary focus on digital gaming and sports betting,” according to the Switzerland-based company.

Formerly Sazka Entertainment, Allwyn operates lotteries in the bulk of the European countries where that form of wagering is permitted. Its marquee clients include lotteries in Austria, Cyprus, the Czech Republic, Italy, and Greece. The company is also participating in the tender process for the fourth UK National Lottery license.

Cohn Robbins is controlled by Gary Cohn, a former Goldman Sachs executive that served in the Trump Administration from 2017 to 2018, and Clifton Robbins. Robbins founded activist hedge fund Blue Harbour Group in 2004. That money manager closed last year. The SPAC raised nearly $830 million when it went public in September 2020.

Allwyn Perhaps Seizing Momentum

It remains to be seen if Allwyn merges with Cohn Robbins, explores a traditional initial public offering (IPO), or decides to remain privately held. But it is clear the reported talks with the SPAC are happening as demand for lottery assets is heating up.

Scientific Games (NASDAQ:SGMS) said in late October it is selling its SG Lottery business to Brookfield Business Partners LP (NYSE:BBU) for $6.05 billion. A few days later, (NASDAQ:LTRY) closed a merger with shell company Trident Acquisitions Corp.

Established lottery businesses, broadly speaking, are growing, profitable, and generating cash flow — all alluring traits for investors. That could explain the enthusiasm for bringing Allwyn public. Plus, there’s significant potential in the nascent internet lottery market.

iLottery offers its own compelling growth trajectory. As notes, just four percent of $430 billion in global lottery sales currently occur online. The company also has significantly lower customer acquisition costs than online sportsbook operators.

Apollo Involved, Too

Should Allwyn go public, it could be a boon for private equity firm Apollo Global Management (NYSE:APO), affiliates of which closed a $563 million financing round in Sazka Entertainment in March.

Apollo has a diverse portfolio of gaming assets and was rumored to be interested in SG Lottery.

For its part, should Cohn Robbins prove successful in bringing Allwyn to public markets, it’d be the latest sign that the gaming/SPAC combination holds appeal. However, many of the post-deal companies are experiencing significant share price retrenchment.