Zeal Network brings Lotto24 back into the fold

Zeal Network SE has announced a takeover offer for Lotto24 AG.

The deal will create a digital lottery group with more than five million customers and combined billings of around Euro 500 million which will build on the existing position of Lotto24, discontinue the German secondary lottery business of Tipp24 and transform it to a locally licensed online broker.

The all-share takeover delivers significant benefits for shareholders with expected cost synergies of EUR 57 million per year, strong future cash generation, and a reduced risk profile, a press statement detailed.

The combination with Lotto24 is also expected to deliver annual run-rate cost synergies of c. Euro 57 million through greater platform efficiencies and reductions in other operational costs.

ZEAL will offer Lotto24 shareholders the opportunity to exchange their Lotto24 shares for shares in ZEAL. The offer consideration will reflect the ratio of the volume-weighted average share prices of both Lotto24 and ZEAL over the past three months before announcement of the transaction.

ZEAL intends to offer one new ZEAL share as consideration in exchange for each ca. 1.6 tendered shares of Lotto24.

Independently of the offer, ZEAL expects to pay an ordinary interim dividend of EUR 1.00 by year-end 2018.

Jonas Mattsson, Chief Financial Officer of ZEAL:

“We believe this deal creates significant value for ZEAL and Lotto24 shareholders. The future growth prospects, significant reduction of regulatory risk and the related uncertainties, and EUR 57 million of annual cost synergies make the combined group a highly attractive long-term investment proposition.

“With our shared history, we are confident of achieving a seamless integration of both companies. We encourage all holders of Lotto24 and ZEAL shares to follow the major shareholders and take part in the offer.”

ZEAL expects to complete the transaction in the first half of 2019.