Sky Sells Controlling Interest in Online Gambling Business to CVC Capital Partner
Sky PLC, formerly known as British Sky Broadcasting Group, has agreed to cede majority ownership of its online gambling business to CVC Capital Partner. The latter will own 80 percent share of the Internet-based Sky Bet in exchange for £600 million in cash, and as much as £120 million in contingent payments. The deal placed Sky Bet’s value at £800 million, representing around 15 times the Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of the 12-month period ending June 30, 2014.
The proceeds of the sale will enable Sky PLC to move forward with its plan of focusing on pay TV, as the product has the potential to develop significantly in the markets in which Sky operates; namely: England, Ireland, Italy, Germany, and Austria. Sky, after all is a leading provider of TV entertainment and communications services for both residential and commercial use. As of June 30, 2013, the multichannel and multi-platform pay TV service provider had as many as 11.2 million subscribers in the UK and Ireland.
The transaction is expected to reach full completion by the first quarter of 2015 and after receiving the necessary regulatory clearance in the UK and Ireland. Sky PLC agreed to the terms and conditions of the sale, in consultation with its financial adviser, Goldman Sachs International.
Sky PLC’s remaining equity stake in the online gambling business is roughly around 20 percent, with continuing board representation. Part of the deal is the retention of the Sky Bet management team led by Sky Bet Managing Director Richard Flint, while the business will still have its administrative center in Leeds. All Sky Bet employees though, will move across into the recently rebranded British Sky Broadcasting PLC, a step taken after the latter took over Sky Italia and Sky Deutschland last November 2014. Sky PLC has also agreed to enter into a long-term brand licence contract with Sky Bet.
The Group Chief Executive at Sky, Jeremy Darroch, commented that the deal would allow them to focus their attention on the significant growth opportunities presented by Sky’s core business, the international pay TV, as doing so will bring considerable value to the company’s shareholders. Mr. Darroch is proud of their achievement throughout the past decade, attaining success in growing Sky Bet from its humble beginnings as a start up organisation, to become one of UK’s leading online betting and gaming entity.
About Sky Bet
Sky PLC’s online gambling company Sky Bet was established in 2001, originally as an online sports betting facility. Today, Sky Bet operates not only the Sky Bet sportsbook channel but also the Sky Poker, the Sky Vegas and the Sky Bingo channels. Sky Bet offers sports betting services that customers can access via desktop, mobile device or by way of Internet-equipped TV.
About Sky PLC
Sky PLC originated as a company known as British Sky Broadcasting (BSkyB) borne by the equal merger of British Satellite Broadcasting and Sky Television in November 1990. The digital subscription television company had rebranded as Sky PLC last November 2014, while already enjoying status as the largest digital subscription television company or pay TV in Great Britain.
About CVC Capital Partner
CVC Capital Partner is a London-based private equity firm founded in 1981, seeking to invest in medium to large-scale companies operating in the industrial and services sector. The firm ordinarily invests by taking a board seat in the business organisation, through acquisition of joint interests, majority interests or minority interests, usually in Asian, European and North American companies.
