Gambling giant Bet365 is considering selling its business to bring in £9 billion in cash for the Coates family.
According to The Guardian, informal discussions are underway within the company, weighing options such as selling, IPO, or partial sale. The company is reportedly valued at £9 billion.
Under the leadership of Denise Coates, Bet365 has been in talks with American advisors and Wall Street banks in recent weeks.
One scenario being considered is the sale of a partial stake in Bet365 to a private equity firm. This transaction would allow the Coates family to retain shares in their family business.
Another option being considered is listing on the US stock market.
Bet365 exits China
Some recent activities of Bet365 suggest a possible sale or IPO, including the operator's exit from the Chinese sports betting market in March and its shift to regulated markets such as the US and Brazil.
Gambling is strictly prohibited within the People's Republic of China, except in the special administrative regions of Macau and Hong Kong.
Bet365's operations in the market have been scrutinized, but it has repeatedly denied violating Chinese law.
In 2020, a representative from Bet365 told The Daily Telegraph: "There is no law explicitly prohibiting offshore operators from providing remote gambling services to China. In the view of Bet365 and its lawyers, Chinese law does not cover offshore gambling operators providing services to China."
Ed Birkin, managing director of H2 Gambling Capital, indicated that there are signs that the group is moving in a certain direction. He noted that if the rumors of Bet365's sale had occurred 12 months earlier, it might have been shocking, but the group's recent actions have pushed merger considerations to the forefront.
Birkin said: "When they announced their exit from China, it looked like they were making a thorough cleanup for something imminent."
"So, for this reason, it's not surprising. I think if it were just because of the exit from the Chinese market, we might think it's more about regulatory pressure, but considering the exit of this football club, I think it somewhat implies that."
Is an IPO feasible?
An industry M&A consultant told iGB that such proposals appear from time to time. However, they see no clear reason why the Coates family would want to take the company public through an IPO.
Moreover, Bet365 would have to undergo a very public disclosure process. Given that Bet365 has been a highly secretive company since its inception, this is likely to be a painful transition.
The M&A consultant noted that DraftKings might be a potential buyer. However, they also pointed out that the deal must be right for both parties to constitute a beneficial transaction.
They believe that Bet365's valuation of £9 billion might be lower than its peers. In comparison, DraftKings currently has a market value of $16.64 billion.
Is Bet365 a waning force in the industry?
In January this year, Bet365 submitted a document to the UK Companies House outlining its latest performance for the 12 months ending March 31, 2024, reporting revenues of £3.72 billion ($4.65 billion). This represents a 9% increase from the operator's 2022-23 fiscal year revenue of £3.41 billion.
The operator returned to profitability during this period after reporting a loss of £12.4 million in 2023. The gambling and gaming division's pre-tax profit was £626.6 million.
Regulus Partners in a data report noted several factors that could affect Bet365's growth plans.
These include competitors' live betting products catching up to Bet365's level and declining VIP and grey market revenues in mature EU markets.
Regulus Partners at the time stated: "Bet365's in-play betting growth engine has been exhausted, and in a relatively mature market environment for in-play betting, no similar growth engine has been found. Therefore, Bet365's market share is rapidly declining, with significant losses."
