BlueBet Holdings entered into a binding agreement for the sale of assets to purchase Betr’s wagering operations and expand its organisation with increased market share in Australia.
The deal, announced today (11th April) will see BlueBet issuing approximately 265.4 millions fully-paid shares to Betr investors. It is approximately 56.9% BlueBet shares.
Since some time, a potential deal is in the making. BlueBet requested a temporary trading suspension on the Australian Stock Exchange yesterday (10 April) in response to speculation about an acquisition.
BlueBet’s shareholders must still support the deal. BlueBet “unanimously recommended” that shareholders vote for the merger because it would create significant value.
BlueBet expects the completion of its merger to take place by July 1 if these conditions are met.
BlueBet chair hails “transformational” moment
Michael Sullivan is the executive chairman at BlueBet. He says, “This moment represents a major transformation for BlueBet.” It brings together Betr’s high-quality customer base and our top-of-the-line technology platform to form a formidable national competitor in the online betting market.
The Betr team fully supports this vision. “We are thrilled by the synergy and growth potential that the merger will unlock.”
Matthew Tripp, Betr’s founder, said: “Today marks a very important day for Betr. This is an important step in our quest to become a Tier 1 betting operator. Our combined scale with the BlueBet platform of technology is very powerful.
What excites me the most is the depth of experience and complementary skills of the combined teams which set us up for success in the next stage of growth.”
The merger will result in “significant” synergies
Betr, which was launched in Australia on October 20, 2022 has grown rapidly and is now a well-known brand. During the first half of the 2024 financial year, it posted an AU$10.0m (PS5.2m/EUR6.1m/U$6.5m) net win and $80.0m gross win.
BlueBet explains the rationale for the proposed merger and how it will be beneficial to both companies.
The “significantly increased” scale of the market and its share are highlights. Betr currently has 341,000 active accounts, and 112,000 open ones. BlueBet is home to over 6,700 customers. BlueBet stated that the agreement will enable it to move Betr users to its technology platform.
BlueBet expects to achieve annualised savings of between AU$11.0m by FY25. Transitioning to one brand for a larger company will also allow advertising and marketing costs to be re-invested.
In the first half, FY25, it is expected that EBITDA will be profitable. The business will be EBITDA-profitable in the same year.
Who will be the driver?
Details of the possible management structure have been provided. Bill Richmond, CEO of BlueBet and current Betr CEO, will become chief operating officer. Darren Holley will continue to be the chief financial officer of BlueBet after the merger.
Tripp will be a non executive director and Sullivan, the CEO of BlueBet, is going to serve as an executive chairman. Ben Shaw, Tim Hughes and a third non-executive director will be appointed in the near future.
Tripp’s role as chairman will be extended to include the longer term. He will take over at 1 January 2025. Sullivan will continue to serve on the board in a non executive director capacity.
BlueBet plans to raise equity for merger support
BlueBet is also planning to raise AU$20.0m through equity. The money raised will be used to finance the costs of the merger, including marketing and migration.
BlueBet will offer the shares in two tranches. First, 49.9 millions new shares are covered, representing 24.8%, and then 45.3 million, or 22.5%, of the existing share capital.
Betr’s Tripp will also participate, and subscribing for new shares worth approximately $2.0 Million. Sullivan from BlueBet also intends to participate and will subscribe for approximately $2.0 million worth of new shares.
BlueBet anticipates that the final new shares will be settled in the placing by the end of May.
Update on Q3 Trading
The announcement also included an update on the trading for BlueBet, Betr and Betr during Q3.
BlueBet’s net winnings in Australia rose 32.5%, to $15.9m. Gross wins also increased 18.4%, to $18,7m. Turnover was up 17.2% at $139.6m.
In Australia, Betr’s net profit was up 55.0% to $23.3m while the gross gain fell 1.1% to $35.9m. The turnover for the same period fell 22.9%, to EUR273.1m.
What about America?
After the merger, the focus will shift to Australia. However, there is a plan for a review of US strategy. BlueBet will inform the market of relevant developments in this area.
BlueBet claims that a reduction of US expenses is to be expected. BlueBet has delivered its global platform and no more B2C launches are planned.
The company said that its B2C market has “clearly” defined paths to profitability. It also mentioned that B2B revenues began in FY25 with the first sportsbook contract signed by the company in Ohio.
