BlueBet Holdings has entered a binding asset sale agreement to acquire the Betr wagering business and create an enlarged organisation in Australia with increased scale and market share.
Announced today (11 April), the deal will see BlueBet issue approximately 265.4 million fully paid shares to Betr shareholders. This equates to around 56.9% of BlueBet’s current shares.
A potential deal has been in the works for some time. Yesterday (10 April), BlueBet added fuel to the fire by requesting a trading halt on the Australian Stock Exchange (ASX) amid talk of an acquisition.
The deal remains subject to a series of closing conditions, including the support of BlueBet shareholders. BlueBet has “unanimously” recommended shareholders vote in favour of the merger, saying it will create material value.
If these conditions are met, BlueBet says it expects to complete the merger by 1 July.
BlueBet chair hails “transformational” moment
“This is a transformational moment for BlueBet,” says Michael Sullivan, executive chairman of BlueBet. “It brings together our best-in-class technology platform with Betr’s large and high- quality customer base to create a national challenger in the online wagering market.
“The Betr team is fully aligned with this vision. We are excited by the growth opportunities and synergies that will be unlocked through the proposed merger.”
Betr founder Matthew Tripp added: “Today is a significant day for Betr. It is a major step towards achieving our ambition to be a tier 1 wagering operator. The combination of our joint scale and the BlueBet technology platform is extremely powerful.
“What excites me most is the deep experience and highly complementary skillsets of the combined team which sets us up well for the next phase of growth.”
Merger will create “significant” operational synergies
Having launched in October 2022, Betr has quickly grown and established itself within the Australian market. During the first half of the 2024 financial year, it posted an AU$10.0m (£5.2m/€6.1m/U$6.5m) net win and $80.0m gross win.
Detailing the strategic rationale behind the merger, BlueBet said the deal will benefit both businesses.
Highlights include “significantly” enhanced scale and increased market share. Betr has a current database of 341,000 open accounts and 112,000 active players, while BlueBet has over 6,700 active customers. BlueBet said the deal will allow it to migrate Betr players to its own technology platform.
Other benefits include operational efficiencies, with BlueBet expecting to realise between AU$11.0m in annualised cost synergies in FY25. Also, transitioning the larger business to a single brand will allow for the reinvestment of advertising and marketing savings.
The business is set to reach EBITDA profitability in the first half of FY25. It will also be EBITDA profitable in the same financial year.
Who will take the wheel?
In terms of management, details of the potential set-up have also been set out. The current Betr CEO will take on the same role at the larger business, with BlueBet CEO Bill Richmond becoming chief operating officer. Darren Holley, currently chief financial officer at BlueBet, will remain in this position after the merger.
As for the board, this will include BlueBet’s Sullivan as executive chairman and Tripp as a non-executive director. Ben Shaw and Tim Hughes will also be non-executive directors, with a fourth to join in due course.
Longer term, Tripp will assume the role of chairman on 1 January 2025. Sullivan will remain on the board as a non-executive director.
BlueBet eyes equity raising to support merger
BlueBet will also launch an equity raising to secure AU$20.0m in funding. This will help finance aspects of the merger including migration, marketing and synergy realisation costs.
This placement will see shares offered at $0.21, with BlueBet to offer shares in two tranches. The first tranche covers 49.9 million new shares, 24.8% of its existing issued share capital and the second 45.3 million shares, 22.5% of existing capital.
Betr’s Tripp intends to participate and subscribe for approximately $2.0 million worth of new shares. Sullivan of BlueBet will also take part and subscribe for $1.0 million of new shares.
BlueBet expects to settle the last of the new shares in the placement by late May.
Q3 trading update
Alongside details of the merger, the announcement included a trading update for BlueBet and Betr in Q3.
For BlueBet, net win in Australia increased 32.5% to $15.9m, with gross win also rising 18.4% to $18,7m. As for turnover, this was 17.2% higher at $139.6m.
Turning to Betr in Australia, net win was 55.0% up to $23.3m despite gross win dipping 1.1% to $37.1m. Turnover for the period was also down, falling 22.9% to €273.1m.
What about the US?
While Australia will be the primary focus of the combined business, a strategic review of the US is planned post-completion. BlueBet says it will keep the market informed of any relevant developments on this front.
However, BlueBet says a significant reduction in US expenditure can be expected. This comes with BlueBet’s global patform having been delivered, with no further B2C market launches planned.
It added that each of its existing B2C markets has a “clear” path to profitability. On this point, it also noted the commencement of B2B revenue in FY25, with the signing of its maiden Ohio sportsbook agreement.
