Kindred Group Verges on $2.7B Takeover by French Lottery Giant FDJ

Francaise Des Jeux (FDJ.PA), the French national lottery operator, has made a US$2.67 billion move for Stockholm-listed online gambling giant Kindred Group (KIND SDB).

On Monday morning, Kindred’s board of directors said in a statement it unanimously recommended that shareholders accept the all-cash deal. It values Kindred shares at SEK130 (US$12.47), a 24.4% premium on their value at the close of trading on Friday, January 19.

In a note Monday, Regulus Partners suggested the real attraction of Kindred to the former state-owned outfit was that “it allows excess cash flow generated from a privatized state monopoly to be pumped into a ready-made competitive platform which the sclerotic, statist FDJ failed organically to create.”

The deal depends on 90% of Kindred shareholders accepting the bid and is subject to regulatory approvals.

FDJ is the largest gambling operator in France. Previously a state-run company, the French government took FDJ public in July 2018 by selling off 50% of its ownership. As well as holding a monopoly on the French lottery, FDJ offers casino games and sports betting.

Big Fish

In November 2023, FDJ acquired Ireland’s national lottery operator, Premier Lotteries Ireland. That made it the second-biggest lottery operator in Europe and the fourth-biggest worldwide.

U.S. hedge fund Corvex is a major shareholder in Kindred (15%) and has been pushing for a sale since mid-2022. That’s after the company reported a 30% decline in revenue, largely because it had been forced to withdraw temporarily from the Dutch market when that country ushered in its new licensing regime.

Kindred Spirits

Kindred Chief Executive Nils Anden said the deal would create a new European gaming powerhouse, well-positioned to rival existing giants like Entain and Flutter Entertainment.

I believe that combining with FDJ, Kindred can accelerate the delivery of long-term strategic projects, continue to grow in core markets, and provide a trusted source of entertainment to customers,” he said in a statement Monday.

FDJ Chair Stéphane Pallez added that the enlarged company would “result in a stronger strategic positioning” for FDJ in sports betting. “In this market, Kindred is one of the leading operators, combining strong brands, best-in-class technology platforms, an attractive growth profile, and a committed approach to responsible gaming,” she said.