La Française des Jeux (FDJ) has confirmed its €2.45bn offer to acquire Kindred Group in a move that has been met with strong reaction from the market. Kindred, which had been actively preparing for acquisition, is set to accept the bid for its outstanding share capital. The acquisition would mark a major strategic shift for FDJ, which has recently been expanding into new markets with the acquisition of ZEturf and Premier Lotteries Ireland.
Analysts are questioning the choice of Kindred as an acquisition target, but the company has recommended that shareholders accept the bid. Kindred is considered a major player in the European gambling market, with a strong presence in Western Europe and access to top markets in the region. This would give FDJ access to new products, such as online gaming, and new markets, while solidifying its position in the French online market.
One question that has arisen from the acquisition is whether FDJ would want access to Kindred’s new in-house sportsbook, despite acquiring Sporting Group in 2019. The purchase offer of SEK130 per share represents a 24.4% increase on the closing price of Kindred shares on January 19th. While some analysts believe the offer is not a value buy based on Kindred’s 2023 results, it looks to be more attractive based on the 2024 projections.
Kindred made headlines last year when it announced its exit from the North American market and the decision to lay off 300 employees as part of a strategic review. The future earnings projections, including the cost-savings from the US exit, appear to be a significant factor in FDJ’s purchase perspective.
The goal for the FDJ-Kindred business is to become a “European gambling champion” with an improved technological platform to dominate the Western European gambling market. Analysts view this acquisition as a meaningful step-change for FDJ, moving the company from a monopoly French operator to a top-tier European operator.