France’s premier lottery and sports-betting operator, La Française des Jeux (FDJ), is poised to finalize a historic deal to purchase the Stockholm-listed Kindred Group for approximately $2.5 billion. This acquisition is a significant move for FDJ, as it aims to strengthen its position in the highly competitive online gambling sector. The Wall Street Journal reported that FDJ, a dominant force in France’s lottery and offline sports betting arena, is seeking to expand its influence in the online gambling market.
The acquisition of Kindred Group, which has a market value exceeding $2.1 billion, is seen as a strategic move to establish FDJ as one of Europe’s largest online gambling entities. This aligns with FDJ’s global ambitions, as the company has been actively pursuing international expansion, evident from its acquisition of Ireland’s Premier Lotteries Ireland in November 2023 for €350 million ($381.6 million).
Kindred Group, founded in 1997, manages nine renowned gambling brands, including Unibet and Highroller, and serves customers across more than 100 countries. The company’s decision to exit North America and refocus on core European markets has provided FDJ with the opportunity to extend its influence in key regions like the UK, France, Italy, the Netherlands, Sweden, and Australia.
Corvex Management, a New York-based hedge fund with a 15% stake in Kindred, has played a crucial role in advocating for the acquisition. Corvex initiated its involvement in April 2022, urging Kindred to explore strategic alternatives to enhance shareholder value. The hedge fund’s push for change gained momentum as Kindred faced a 30% decline in quarterly revenue, prompting a reconsideration of services in the Netherlands.
The European gambling sector has recently become a focal point for activist investors, with Corvex also having disclosed a 4% stake in Entain in December. This emphasizes the need for companies to explore all options to boost stock value.
The FDJ-Kindred deal is anticipated to have significant implications for investors and stock prices. Despite FDJ’s challenges in the lottery segment during Q3 2023, the company’s strategic acquisitions, including the impending Kindred acquisition, are expected to fortify its portfolio and offset losses. The acquisition is expected to send ripples through the financial markets and further transform the landscape of the gambling industry.