It comes as the Unibet and 32Red operator also published its financial results for the third quarter of 2024, reporting increases in total revenue, gross winnings revenue (B2C) and active customers when compared to the same period last year.

Within the report, CEO Nils Andén noted that with the completion of Kindred’s acquisition by FDJ, the group will exit ‘.com’ markets “that don’t have a clear path to local regulation in the near future”, which will impact the company’s ability to hit its stated underlying EBITDA target of £250m.

In addition, Andén thanked investors for their support and praised the global Kindred team for their hard work as the group enters its next phase with FDJ.

Squeeze-out and delisting

Earlier this week, FDJ announced that its shareholding in Kindred had increased to 98.6% after an additional 14,734,917 Kindred SDRs were tendered, representing 6.83% of the share capital being added on top of the 91.77% it already had following the end of the first settlement delivery of the public tender offer on 11 October.

Since FDJ holds over 90% of Kindred’s share capital, the group has requested the implementation of a squeeze-out procedure, exercising its right to require all those shareholders of Kindred who have not tendered their shares pursuant to the offer, to transfer all their shares to FDJ.

Kindred said in a statement: “Each squeezed-out shareholder is hereby further notified that, in view of the exercise of the squeeze-out right by FDJ, each squeezed-out shareholder must transfer all its shares in the company to FDJ in accordance with the provisions of the articles of the company and the shareholder squeeze-out notice.”

In light of this, Kindred’s board of directors has applied for delisting of the company’s SDRs from Nasdaq Stockholm, with its last day of trading to be announced as soon as the date has been confirmed by Nasdaq Stockholm to the company.

Key markets support Q3 revenue growth

As previously mentioned, Kindred has also published its Q3 2024 financial results, noting that total revenue for the period has increased by 4% year-over-year to £294.5m (Q3 2023: £283.9m).

Andén attributed this growth to a strong performance being maintained across the company’s key markets. B2C revenue also rose by 3% YoY to £283.1m (2023: £274.7m).

The company’s number of active customers increased in Q3 as well by 9% YoY to 1,701,100 (2023: 1,563,762).

“The positive momentum gained throughout the first half of the year continued as we stepped into the final half of 2024, with key markets maintaining strong performance,” the CEO said.

“Total revenue for the third quarter was £294.5m, representing a 4% increase compared to the same period last year (5% in constant currency). Excluding North America, total revenue increased by 6% for the same period.”

Underlying EBITDA target

Kindred’s underlying EBITDA increased by 49% YoY to £63.4m (2023: £42.6m).

However, Andén also highlighted that Kindred’s exit from ‘.com’ markets that don’t have a clear path to local regulation will impact the company’s ability to reach its stated underlying EBITDA target of £250m.

Andén commented: “I am very pleased that our underlying EBITDA came in at £63.4m, reflecting an increase of 49% year-over-year. This represents an underlying EBITDA margin of 22% and demonstrates our scalable business model.

“The stellar performance and dedication from everyone at Kindred has resulted in a year-to-date underlying EBITDA of £196.3m. I am very pleased that we would be well on track to achieve our stated underlying EBITDA target for the full year 2024 of £250m.

“However, following the expected completion of Kindred’s acquisition by La Française des Jeux (FDJ), Kindred will exit .com markets (including Norway) that don’t have a clear path to local regulation in the near future. This action will negatively impact our ability to reach our stated underlying EBITDA target.”

Kindred’s profit before tax fell to £12.5m (2023: £15.1m) due to “significant strategic review costs of £30.9m (2023: £0.6m) in relation to the FDJ transaction”. Profit after tax was £9.6m (2023: £12.6m), which included a loss from discontinued operations of £0.4m (2023: £13.1m) and profit from continuing operations of £10m (2023: £25.7m). 

Earnings per share were £0.04 (2023: £0.06), while free cash flow amounted to £-4.2m (2023: £24.5m).

CEO thanks staff and investors

Andén ended Kindred’s Q3 report by looking ahead to the company’s future, noting that its focus on locally licensed markets is helping to produce “long-term, sustainable revenue”.

“Our strategic focus on growth in locally licensed markets continues to generate long-term, sustainable revenue,” he said.

“Year-on-year Gross winnings revenue from locally licensed markets has grown 4% versus the same period last year (7% excluding North America). France has sustained strong momentum, further driven by both the Euros and the home Olympics. In addition to France, we have seen very positive results in the Netherlands, Romania and Denmark during the period.”

“I’m thrilled that our in-house sportsbook development continues to progress according to schedule. Following successful launches in several smaller markets, we are now on track for our first locally licensed market launch later this quarter.”

As the company enters its next phase with FDJ, the CEO also took the opportunity to thank investors and praise Kindred’s staff for their “unwavering resilience and dedication”.

Andén concluded: “With the public offer by FDJ now completed, and as we transition into the next exciting phase in Kindred’s history, I would like to take this opportunity to thank investors in Kindred, both past and present. 

“Twenty years as a public listed company on Nasdaq Stockholm comes to an end. Together, we have made a significant contribution to the creation of a competitive, digital and sustainable online gambling industry. 

“Finally, I would like to take this opportunity to thank the global Kindred team for their unwavering resilience and dedication. Where one chapter ends, a new one begins.”

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Earlier this month, the French gambling group completed its acquisition of Unibet and 32Red operator for nearly €2.5bn, a transaction that had been in the works since an offer of SEK 130 in cash per Swedish Depository Receipt (SDRs) was submitted back in January this year.

Following the end of the first settlement delivery of the offer on 11 October, FDJ held 91.77% of Kindred’s share capital, tendering 195,659,291 Kindred SDRs, representing 90.66% of the group’s capital, alongside acquiring 2,400,000 Kindred SDRs directly from Veralda, representing 1.11% of the group’s share capital.

However, at the time, FDJ extended its offer to 18 October to allow for Kindred shareholders who have not tendered their shares to do so on unchanged terms. With that date now passed, the group has announced that an additional 14,734,917 Kindred SDRs were tendered, representing 6.83% of the share capital.

Following settlement delivery of the extended offer, expected to take place on 29 October, FDJ’s shareholding in Kindred will therefore be 98.6%.

Since FDJ holds over 90% of Kindred’s share capital, the group intends to “request the implementation of the squeeze-out procedure” following Kindred’s articles of association to acquire all the shares not tendered in the public offer, delisting Kindred’s SDRs from Nasdaq Stockholm.

Earlier this month, Stéphane Pallez, Chair and CEO of the FDJ Group, described the Kindred acquisition as creating a “European champion” that will produce sustainable and profitable growth.

FDJ noted that thanks to the transaction, it has “a diversified and balanced profile, based on monopoly activities, primarily lotteries, in France and Ireland, and on online sports betting and gaming activities open to competition in Europe”.

The group also expects the offer to generate “around 26% of its revenue internationally” thanks to Kindred’s European market presence in countries such as the Netherlands, the UK, France, Sweden and Belgium.

In addition, FDJ stated that its online gaming range open to competition will account for “around 27% of its business”, which includes sports and horse betting, poker and casino offerings.

Last week, Kindred added personnel from FDJ to its Board of Directors to replace recent resignations, with Executive Vice-President Finance, Performance and Strategy Pascal Chaffard, Finance Director Edeline Minaire and Chief Regulation Officer Célia Vérot being elected.

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Reuters has reported that they were told by FDJ that the Social Security finance bill (PLFSS) will not feature any tax measures related to gambling.

FDJ comments came as its shares took a hit on Thursday last week, falling by 9.7% off the back of reports that the French government would be implementing a tax increase on online gaming and betting from 2025, in order to increase the Social Security budget.

The operator’s share price has since rebounded slightly at the start of this week, but as of 7 October, it has still fallen by around 5.6% over the past five days.

The French gaming group told the news outlet in a statement: “To our knowledge, the PLFSS (Social Security finance bill), which will shortly be presented to the Council of Ministers, will not contain any tax measures concerning gambling.”

Back in April, Autorité Nationale des Jeux, France’s gambling authority, reported that gross gaming revenue from the country’s operators increased by over 3% year-over-year, with casino activity growing by more than 8%.

Earlier this year, the ANJ also published its 2024-2026 strategic plan, broken down into three pillars to improve regulation and preserve the sector’s transparency and integrity.

These three pillars are: drastically reducing the share and number of excessive gamblers within the gambling market; fighting against illegal gambling; and strengthening the economic dimension of regulation to better understand market balances and provide solutions.

As for FDJ, the group completed its acquisition of Kindred Group last week, a transaction of nearly €2.5bn that the operator says creates a “European champion” in the gaming industry.

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FDJ’s acquisition of Kindred has been in the works since an offer was submitted for the Unibet and 32Red operator – SEK 130 in cash per Swedish Depository Receipt (SDRs) – back in January, an offer that was unanimously recommended by Kindred’s board of directors.

Since then, FDJ has been seeking Kindred shares to meet the condition precedent of controlling more than 90% of Kindred’s share capital, in addition to gaining the approval of the acquisition from France’s national competition regulator – the Autorité de la concurrence – last month, as well as from the Swedish Financial Supervisory Authority in February.

At the end of the offer period on 2 October, FDJ had tendered 195,659,291 Kindred SDRs, representing 90.66% of the group’s capital, in addition to acquiring 2,400,000 Kindred SDRs directly from Veralda, representing 1.11% of the group’s share capital.

Meeting the 90% share capital condition precedent, FDJ has completed the acquisition of Kindred, with the settlement delivery for Kindred shareholders who have tendered their SDRs to the offer to take place from 11 October. FDJ will implement a squeeze-out procedure on Nasdaq Stockholm.

FDJ also announced that it is extending its offer until 18 October 2024 at 5pm CEST to enable Kindred shareholders who have not tendered their shares to do so on unchanged terms, with settlement and delivery taking place from 29 October.

Commenting on the transaction, Stéphane Pallez, Chair and CEO of the FDJ Group, described the Kindred acquisition as creating a “European champion” that will produce sustainable and profitable growth.

The group stated that through the acquisition, it now has “a diversified and balanced profile, based on monopoly activities, primarily lotteries, in France and Ireland, and on online sports betting and gaming activities open to competition in Europe”.

In addition, FDJ expects the offer to generate “around 26% of its revenue internationally” thanks to Kindred’s presence in European markets such as the Netherlands, the UK, France, Sweden and Belgium.

Meanwhile, its online gaming range open to competition will account for “around 27% of its business”, which includes sports and horse betting, poker and casino offerings.

“I am delighted to announce today the acquisition of Kindred, a leading European player in the competitive online betting and gaming sector,” commented Pallez.

“Kindred has strong brands, recognised technological excellence and an attractive growth and profitability profile, all of which will bolster FDJ’s strengths. The two groups also share high standards for responsible gaming and a business model that combines performance and responsibility. 

“This acquisition creates a new European champion that intends to pursue its strategy of sustainable and profitable growth for the benefit of all its stakeholders.”

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Previously, the acceptance period’s expiry was scheduled for 19 November 2024, but this has now been moved closer to 2 October after FDJ obtained all necessary regulatory approvals for the acquisition to go ahead.

Earlier this month, the French gambling group received approval for its proposed Kindred acquisition by France’s national competition regulator, the Autorité de la concurrence. This was the last regulation condition necessary for the group to finalise the Kindred offer.

Since submitting an offer of around €2.6m for the Unibet operator (SEK 130 in cash per Swedish Depository Receipt) back in January, which was unanimously recommended by the operator’s board of directors, FDJ has been moving closer towards the acquisition’s completion.

Progression over the past few months included receiving approval from the Swedish Financial Supervisory Authority in February and purchasing shares in Kindred.

With approval from the Autorité now obtained as well, FDJ has brought forward the acceptance period’s expiry to the beginning of next month.

FDJ added that the offer’s completion “remains subject to other conditions, notably it being accepted to such an extent that FDJ becomes the owner of more than 90% of the total number of shares in Kindred (on a fully diluted basis)”.

The operator noted: “To date, five shareholders (Corvex Management LP, Premier Investissement SAS, Eminence Capital, Nordea and Veralda), representing 26.72% of Kindred’s outstanding Swedish depository receipts, have made an irrevocable commitment to tender their SDRs to the offer.

“In addition, FDJ acquired 1.11% of Kindred’s outstanding SDRs directly from Veralda in March.”

The results of the offer will be announced by FDJ on or around 3 October at the close of the market. Should the offer be completed, settlement and delivery for Kindred shareholders who tender their SDRs will happen on or around 11 October.

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FDJ was given the go-ahead by the Autorité after agreeing to a brand separation commitment to market its offerings under different brands. 

Back in May, the ADLC was notified by FDJ of its plans to acquire sole control of Kindred, four months after the French gambling group submitted an offer of around €2.6m for the Unibet operator in January, which was unanimously recommended by Kindred’s board of directors.

FDJ has been edging closer towards the acquisition’s completion ever since the beginning of the year, receiving approval for the deal from the Swedish Financial Supervisory Authority in February and purchasing shares in Kindred along the way.

The French operator stated within its H1 results in July that approval from the Autorité was the last regulatory condition necessary to finalise the Kindred offer. After examining the transaction, the ADLC has cleared the acquisition, subject to conditions. 

FDJ has entered into behavioural remedies to address the risks of harm to competition identified.

Recognition of ZEturf acquisition

Within its competitive analysis, the Autorité recognised that it had previously given clearance to FDJ for its past acquisition of online sports and horse racing betting operator ZEturf Group in September last year.

The regulator highlighted how the ZEturf merger was “likely to give rise to risks of harm to competition through conglomerate effects, given the nexus between FDJ’s monopoly activities and ZEturf’s online sports and horse race betting activities”. 

The ADLC added that the commitments which essentially “aim to separate FDJ’s monopoly activities from the competitive activities marketed by FDJ following the acquisition of ZEturf, are currently being implemented”.

Taking into account Kindred’s activity in online sports and horse racing betting as well as online poker, the Autorité believes the Kindred acquisition is “likely to present the same types of conglomerate risks”.

However, the regulator recognised that the ZEturf commitments applying to FDJ marketing offerings post the transaction “do not include Kindred’s activities and are therefore not sufficient to offset the risks raised by the new transaction”.

In a statement, the Autorité said: “While taking into account the provisions of the ongoing commitments, the Autorité considers that the Kindred acquisition entails the risk of FDJ commercially linking Unibet’s online horse race betting, online sports betting and online poker offers with its monopoly games (lottery, sports betting at points of sale). 

“The new entity could be tempted to create links between the monopoly games offered by FDJ and the games offered by the target by promoting online sports and horse race betting and online poker to monopoly game players, deploying commercial offers encouraging monopoly game players to play online horse race and sports betting and online poker, maintaining confusion between the customer paths of monopoly game players and online horse race and sports betting players and online poker players, and using a single customer account for all the games offered.”

Brand separation

The Autorité outlined the commitments FDJ must undertake for the Kindred acquisition, including applying and supplementing the ZEturf acquisition commitments, as well as a brand separation commitment.

“To mitigate the risks raised, FDJ undertakes to apply and supplement the commitments made in September 2023 in connection with the clearance of the acquisition of ZEturf (Decision 23-DCC-191 of 15 September 2023),” the ADLC said.

“In addition, in response to comments made by third parties during market tests, FDJ has made a new brand separation commitment, whereby all competitive games will eventually be marketed under one or more brands specific to competitive games and not sharing a common root or logo with the FDJ or Parions Sport Point de Vente brands or any other brand under which FDJ markets its monopoly games in France.

“In light of the commitments made by FDJ, the Autorité cleared the transaction following the phase one examination.”

Kindred didn’t provide an update on the FDJ acquisition when it announced its Q2 financials in July. The operator is expected to publish its Q3 results next month on 25 October.

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It’s a move that will have gained the attention of Française des Jeux (FDJ), which is eyeing the full acquisition of Kindred. 

As the bid from the FDJ remains under evaluation, however, the trade involving Goldman Sachs last week, which was notified by Kindred, is not unusual amidst the wider bid from the FDJ. The bid from the FDJ is reportedly around €2.6bn.

One source told SBCNews: “Kindred trades very close to the deal price, which suggests the market thinks there is a high probability that the deal closes”. FDJ’s proposal is still being evaluated by French and European authorities, the former over potential antitrust issues and the latter over whether FDJ underpaid for lottery rights at the time of its privatisation in 2019-20.  

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The French gambling operator submitted an offer to acquire Kindred back in January for around €2.6bn, an offer which was unanimously recommended by Kindred’s board and approved by the Swedish Financial Supervisory Authority in February.

The offer initially launched on February 20 and will last for a maximum of 39 weeks, expiring on or around November 19, 2024, subject to regulatory authorisations and FDJ’s acquisition of at least 90 per cent of Kindred’s capital.

FDJ also obtained irrevocable undertakings to accept 27.9 per cent of outstanding shares in Kindred for SEK 130 per share. Veralda was allowed to sell 50 per cent of its shares, representing a 2.3 per cent stake. 

During its March 15 general meeting, Kindred amended its bylaws “to provide for squeeze-out rights of an offeror”. Shares could not be sold to FDJ at higher than the previously stated offer price of SEK 130 per share.

On March 18, Veralda notified FDJ that it would be selling 49 per cent of its shares, 1.12 per cent of outstanding shares in Kindred for SEK 122.5 per share. FDJ exercised its right to purchase the 2.4 million shares.

Following the purchase, FDJ holds 1.12 per cent of outstanding shares in Kindred, with the remaining irrevocable undertakings with Corvex Management LP, Premier Investissement SAS, Eminence Capital, Nordea and Veralda representing in total 26.82 per cent of the outstanding shares in Kindred.

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Back in January, FDJ submitted an offer to acquire the gambling operator for around €2.6bn, which was unanimously recommended by Kindred’s board of directors.

To be launched on February 20, 2024, the offer will last for a maximum of 39 weeks, expiring on or around November 19, 2024. It remains subject to regulatory authorisations and FDJ’s acquisition of at least 90 per cent of Kindred’s capital.

An extraordinary general meeting will be held by Kindred on March 15, on the second convening, to determine the changes to allow to the Articles of Association for the “implementation of a squeeze-out procedure” if FDJ acquires at least 90 per cent of Kindred’s capital.

Kindred noted during its recent financial report that FDJ doesn’t intend to materially alter Kindred’s operations following the implementation of the offer, apart from exiting the Norwegian market and “other non-regulated markets with no ongoing path to regulation”.

FDJ also published its financial results earlier this month, reporting strong online growth with an 18.8 per cent improvement in net gaming revenue. 

The firm also used the results as an opportunity to further outline ambitions for the creation of a European champion through the Kindred acquisition. 

Stéphane Pallez, Chair and CEO of the Group, stated: “FDJ delivered solid growth and results this year. The proposed acquisition of Kindred, announced at the end of January, will enable the creation of a European champion and significant value creation for the benefit of all stakeholders, in line with our model combining performance and responsibility.”

On a recent episode of the iGamingDaily, SBC News Editor Ted Menmuir emphasised that FDJ’s acquisition of Kindred would likely ‘have a ripple effect on pretty much all Western markets and also shake up the competitive landscape of the European gambling pool’.

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Providing its full year update for 2023, the group revealed strong growth across its online games with an 18.8 per cent increase in net gaming revenue (NGR), as it was bolstered by the integration of Premier Lotteries Ireland and ZEturf in line with expectations. 

It comes as the group doubles down on ambitions for European growth as it embarked on a potential acquisition of Kindred at the beginning of this year. FDJ detailed that the tender offer will open on 20 February, 2024 for a period of nine months.

Stéphane Pallez, Chairwoman and CEO of the FDJ Group, said: “FDJ delivered solid growth and results this year. The Group reached in 2023 a major milestone in the implementation of its strategy with the completion of the acquisition of Premier Lotteries Ireland and ZEturf. The proposed acquisition of Kindred, announced at the end of January, will enable the creation of a European champion and significant value creation for the benefit of all stakeholders, in line with our model combining performance and responsibility.”

Igaming growth for the firm was accelerated by the enhancement of its lottery offering as the group tapped into acquisitions and rights tenders in order to bolster growth. 

FDJ produced an overhaul of the ‘game formula’ of its AMIGO point-of-sales network as ordered by the French gambling regulator Autorité Nationale des Jeux (ANJ). 

The group detailed that ‘the revision notably concerns the reduction in the number of draws (with a suspension of 15 minutes per hour between 6:00 and 14:00) and the maximum amount per bet (€8 vs. €20).”

The firm also detailed an increased focus on social responsibility, providing €10m over the 2023-2027 period to support the underage gambling prevention programme targeted at young people and implemented by the ARPEJ association.

It comes amidst a transitional period for the French gambling space, as regulatory frameworks in the region continue to evolve. 

A recent letter from some of the key players within France’s casino sector sent to the new Prime Minister Gabriel Attal warned against the efforts of Française des Jeux (FDJ) for its aggressive expansionary policies and the “monopolistic advantages”.

The claims were dismissed by FDJ, which said they were “unfounded”, and Les Echos noted that the casinos’ move could also be seen within the context of a study on the reform of gaming clubs (cercles de jeux) in Paris set to be published shortly.

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