Spanish gaming company Codere is reportedly on the market, with M&A expert Christian Tirabassi suggesting that while various large gambling companies might show interest, private equity is the most probable buyer. According to a report by Spanish newspaper Expansión, Codere has a valuation exceeding €2 billion ($2.3 billion), with a goal to finalize the sale before the summer hiatus in August.
The potential deal also encompasses Codere Online, which primarily operates in Spain and Latin America. Tirabassi, founder and senior partner at M&A advisory firm Ficom Leisure, characterizes the sale of Codere as largely appealing to private equity.
However, he also indicates that some international gaming giants might consider acquiring Codere, though he does not identify any clear 'natural buyer'. “Lottomatica is going to look into it, DraftKings is going to look into it, Entain is going to look into it,” Tirabassi stated. “This is something for the big guys, because it gives access to a number of markets.”
Echoing this sentiment, Ed Birkin, managing director of H2 Gambling Capital, mentioned that he sees likely buyers as Allwyn International or Flutter Entertainment, with private equity as an additional option.
Concerns have been raised about whether the €2 billion valuation might be too steep for most operators outside the elite tier. Birkin expressed skepticism about the figure, suggesting it could be beyond the reach of many. Similarly, Tirabassi voiced doubts about the valuation's accuracy, implying that its release might be a strategic move. “Look, this is PR,” he said, adding that he thinks the price was leaked to influence market perceptions. He elaborated, “There is no way you can get to that valuation that was mentioned.”
Codere is facing significant financial challenges, currently owned by around 84 investment funds. Tirabassi noted that the owners may have found themselves holding shares unintentionally and decided to sell when it became clear the company was not performing as desired. “This disinterest has led to a severe lack of investment in Codere, leaving it a ‘fatigued’ business,” he explained. He described the company as lacking direction and adequately driven leadership, stating, “It’s being underinvested, undercapitalized.”
Despite the difficulties Codere is enduring, Tirabassi believes there remains potential for value creation with the right investment. He argues there’s interest from gambling operators since the acquisition could be beneficial despite the challenges it poses. “There is a lot of value to be created going forward, no doubt,” he asserted. Codere has a significant presence in several gaming segments, excluding lotteries, and a strong position in Spain and Italy. “First of all, land-based makes money,” Tirabassi emphasized, indicating that while adjustments are necessary, the core land-based operations remain profitable.
Questions surround the inclusion of Codere Online in the sale. Codere Online, which was separated from the main company in 2021 and listed on the US Nasdaq, still has Codere Group as its majority owner. Tirabassi insisted that Codere Online should be part of any deal, suggesting that the two entities are currently not functioning cohesively. “Today, Codere is basically two different companies,” he remarked, highlighting the need for a unified approach. He remarked that combining the companies would likely enhance the sales proposition, despite questioning the appeal to potential buyers.
