Zeal online lottery group plans acquisition of Lotto24

Online lottery group Zeal Network announced Monday that it has launched an all-share voluntary takeover offer for Germany’s largest lottery broker, Lotto24 AG.

Zeal intends to offer one new Zeal share with a nominal value of Euro 1.00 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 Euro 1.00 by year-end 2018.

The Zeal announcement notes that the deal will create a digital lottery group with over 5 million customers worldwide and combined billings of around Euro 500 million that has a diverse international footprint.

Zeal intends to build on the Lotto24 enterprise, and will discontinue the German secondary lottery business of Tipp24, transforming it to a locally licensed online broker and boosting the growth of the online brokerage in the ca. Euro 8.7 billion German lottery market.

Zeal says the agreement has the potential to generate cost saving synergies of Euro 57 million a year in a business that offers strong cash flow and a lower riak profile.

The Zeal statement reveals that the company has entered into tender agreements with major shareholders of both Lotto24 and Zeal, namely Günther Group, Working Capital and Jens Schumann (a member of the supervisory board of Lotto24) regarding their shares in Lotto24, covering approximately 65 percent of the shares and voting rights in Lotto24.

By entering into the tender agreements, these shareholders have undertaken to tender their shares in Lotto24 into the offer.

“Zeal will reunite with Germany’s largest digital lottery broker. We will have a significantly enlarged, loyal customer base, strong technology and marketing platforms, and an exceptionally experienced team,” said Dr Helmut Becker, CEO of Zeal, in a company statement.

“Together with our plans to regain control of Tipp24 and transform its German business models, this puts us in an excellent position to accelerate online growth in both the German lottery market and the Euro 270 billion global lottery sector – as a locally-licensed broker, licensed operator, and lottery investor.

“This transaction is good for shareholders, good for customers, and good for the German federal states and their lottery beneficiaries. We have held initial, constructive conversations with Lotto24 and look forward to further engaging with the management to achieve a successful combination of the businesses. We also look forward to a successful and constructive cooperation with Germany’s state lotteries and invite all shareholders to join us on this journey.”

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