Paf is excited to be building on “a great Latvian story of success” after signing an agreement with 888 to purchase the Latvian business for $28,25m.
The initial consideration is EUR24m, payable in cash at completion. A further earn-out up to EUR4.25m, payable next year after the completion of 2023 audited finances.
Christer FAHLSTEDT, Paf’s CEO, said that the company was “excited” to be able to continue building on a successful Latvian story. We are confident that, from a long-term view, the Latvian market will move in the direction towards increased player protection. This is a strategic fit for Paf.
The gambling group has stated that the divestment will have no impact on the ongoing operations of the company. It is in line with its strategy to focus on growth and core markets.
The completion, according to 888, is dependent on the carving out of the Latvian subsidiaries from the group’s suppliers contracts, the incorporation of Paf’s Latvian subsidiary, certain consents for a change in control, and the payment a dividend. The finalisation of this is expected within the next few weeks.
The Executive Chair of 888, Lord Mendelsohn stated: “We constantly review our asset portfolio to ensure we only hold assets that contribute to our strategy over the long term and maximise shareholder value.”
“As an organisation, we have a relatively limited exposure to the Baltic region. This means that this region is not a core or growth market where we prioritize our investments.
The Latvian business has a local regulated, high-quality business with an excellent team. It has a strong position on the market. I want to thank the team for all their hard work during their tenure with the group. I am confident that the business will flourish under the new ownership of Paf.
The business had a net revenue in 2022 of 9.1m PS and an EBITDA of 2.5m PS. As shown on a balance sheet for December 31, 2022 the value of gross assets that were subject to the deal was around PS9.3m.
Janis Tregers is the co-founder of Latvia and board member. He said: “We started in 2012 with 11.lv and have grown to a leading position on the market in Latvia in 10 years. We now hold a 10% market share.”
“In 2018, we were able to sell 75 percent of the company to Mr Green for EUR3.7m. This transaction, which will see the sale of the entire business at a value up to EUR28m, reflects our team’s hard work across the board that has resulted in significant value creation.
“I am confident that under the new ownership of Paf the business will continue on its upward trajectory, providing great products and experiences to our customers.”
