Sky has added up to £800 million to its coffers for Premier League rights and a potential swoop for a mobile operator with the sale of its Sky Bet online gaming business.
The huge deal gives the satellite broadcaster’s chief executive Jeremy Darroch £600 million in cash from private equity buyer CVC and up to £120 million more depending on the performance of the UK’s fifth biggest gambling site, which has one million customers.
Sky also retains a 20 per cent equity stake in the business valued at £80 million.
The sale comes four months after Darroch spent £7 billion buying Sky Italia and Sky Deutschland from Rupert Murdoch’s 21st Century Fox, pulling off the company’s biggest deal in 25 years to push deep into European markets.
CVC’s cash adds ballast to a balance sheet strained by the mega-deal ahead of the next Premier League auction early in the new year, although Sky maintains it already has enough firepower.
It could also help fund a tilt at a mobile network after it appointed Lazard to weigh options this week. A deal frenzy has gripped the telecoms sector since BT confirmed bid talks with O2 and EE to enter the mobile market.
Sky Bet was founded in 2001 but has grown rapidly with the boom in online betting and made pre-tax profits of £50 million on revenues of £182 million in the year to June.
It claims around 7 per cent of the online gambling market behind larger players Betfair, Paddy Power, Bet365 and William Hill. CVC, which has made previous investments in William Hill and IG Group, is paying a healthy 15 times earnings on the deal.
An industry source said: “They’ve built a very valuable asset and it was almost becoming too big for Sky, which is a media business not a betting business. It’s a fancy price as well — 15 times trailing earnings, including a bit of the World Cup, is very nice.”
Investec analyst Steve Liechti said: “This looks interesting as Sky Bet is a non-core but highly successful asset. Proceeds should help pay down additional debt on a higher than expected Sky Deutschland stake — 90 per cent — which we presume will go to 100 per cent reasonably soon... this clears the decks ahead of further expected telco/convergence driven consolidation in the UK and Europe.”
CVC is understood to have been in talks over Sky Bet for months and agreed a deal without an auction. A trade sale or float appears the most likely option in three to five years if the business keeps up its stellar performance.
Darroch said: “This transaction will allow us to focus further on the substantial growth opportunities in our core international pay-TV business while realising significant value.”Reuse content