Entain considering $1bn acquisition of Olympic Entertainment to become market leader in the Baltics

The UK-based gambling giant Entain Plc is reportedly preparing for a $1bn (£747.4m/  €890m) takeover of the Estonian operator Olympic Entertainment Group (OEG).

News of Entain’s plans came as Entain announced plans to team up with NBA legend Charles Oakley for a charity initiative last week.

Entain reportedly considering an OEG buyout

News of Entain’s potential acquisition target was disclosed in a report from Bloomberg last week Friday.

The publication cited “sources who wish not to be identified, as the information is private”.

However, neither Entain or OEG have issued statements acknowledging a potential deal.

What would Entain gain?

According to the report,  Entain is looking to acquire OEG’s flagship betting brand OlyBet and its operations in Croatia and Lithuania.

The deal would also include an option to buy Olympic’s outstanding business in early 2023 based on its performance.

If Entain does pursue a takeover of OEG, Entain would become the dominant force in the Baltic gambling markets of Estonia, Latvia and Lithuania, where OEG operates 100 Olympic Casino points and its flagship betting brand OlyBet.

The UK-based operator began its expansion in the Baltics last spring after completing a €370m buyout of Enlabs AB. This saw Entain add OEG’s main online gambling rival brand Optibet to its European portfolio.

What led to the purchase?

Expansion into the Eastern European and Baltic markets is necessary for Entain as Q3 financial updates outlined costly market adjustments across legal markets in Western Europe.

Gambling firms across Europe have been forced to adapt to new regulations in markets like Germany and the Netherlands. Additional gambling reforms are awaiting approval in the UK, Sweden, and Spain.

The sale of OEG has been deemed as a likely outcome following the collapse of the firm’s owner Novalpina Capital. The private equity fund is currently in the process of settling a dispute between investors and founders related to fund management, voting rights, and investment control.

Back in 2018, Novalpina acquired OEG from company founder Armin Karu and business partner Jaan Korpusov for €300m

The report from Bloomberg explained that Entain had multiple options in how it could structure a deal with Novalpina including an option that could see the firm acquire individual market-by-market assets to better suit its Eastern European growth plans.  

What has Entain been up to on the M&A front? 

News of Entain’s plans to acquire OEG comes after Entain turned down an $11bn acquisition bid from its US sports betting partner MGM Resorts. This was a bid that Chairman Barry Gibson refused to put forward to investors, citing that MGM had “significantly under-valued Entain’s future prospects.” 

Despite this, the market expects MGM to attempt another takeover bid for Entain before the end of the year.

Gibson’s view that the offer undervalued the firm was confirmed when US sports betting rival DraftKings made a $22bn takeover offer for Entain in September. However, in October, DraftKings decided to shelve its approach.