France’s leading lottery and sports betting operator, La Française des Jeux (FDJ), is on the brink of finalizing a significant deal to purchase the Stockholm-listed Kindred Group for approximately $2.5 billion. This acquisition is seen as a strategic move by FDJ to strengthen its position in the highly competitive online gambling sector, as reported by The Wall Street Journal.
With a market value exceeding $2.1 billion, Kindred Group manages nine well-known gambling brands and serves customers in over 100 countries. The potential acquisition aligns with FDJ’s global ambitions, following its recent acquisition of Ireland’s Premier Lotteries Ireland for €350 million ($381.6 million) in November 2023. This move will allow FDJ to diversify its revenue stream and compete with industry giants like Entain and Flutter Entertainment.
The New York-based hedge fund, Corvex Management, which holds a 15% stake in Kindred, has been instrumental in advocating for the acquisition. After Kindred experienced a 30% decline in quarterly revenue, prompting a reconsideration of services in the Netherlands, Corvex pushed for the need to explore strategic alternatives to enhance shareholder value. This follows a trend of activist investors in the European gambling sector, as evidenced by Entain’s appointment of the CEO of activist investor Eminence Capital to its board earlier this year.
The FDJ-Kindred deal is expected to have a significant impact on the financial markets, with potential consequences for investors and stock prices. Despite challenges in the lottery segment during Q3 2023, FDJ’s strategic acquisitions, including the impending Kindred acquisition, are anticipated to strengthen its portfolio and offset losses. This move signifies FDJ’s ambitious expansion into the online gambling market, positioning itself as one of Europe’s largest online gambling entities.