“A total of 17,000,000 common shares were sold by the Company and 8,000,000 common shares were sold by certain shareholders of the Company (the “Selling Shareholders”). The net proceeds to the Company, after underwriting discounts and commissions, but before estimated expenses of the Offering payable by the Company, are approximately US$622 million.”
This cash can be added to the $750 million it has borrowed in a private offering of unsecured senior notes due in 2026.
The total purchase price of SBG is $4.7 billion, which the company is paying in a mixture of cash and stock. $3.6 billion will be paid to SBG shareholders in cash, with the rest of the value coming in the form of newly issued shares in The Stars Group.
“fully committed debt financing of approximately $6.9 billion including $5.1 billion of first lien term loans, $1.4 billion of senior unsecured notes and a $400 million revolving credit facility. The funded proceeds of $6.5 billion will be used for the cash portion of the transaction consideration, refinancing the Company’s existing first lien term loan and repaying SBG’s outstanding debt.”
The closure of the equity funding isn’t actually a complete closure. The deal brokers and selling shareholders have the option to sell an additional 3.75 million shares by July 21.
The offered shares were priced at $38, but at the time of writing, the NASDAQ quote for Stars Group shares has them priced at just $34.60. Selling the optional shares at $38 may not be so easy.
The day Stars announced the public share offer its stock price dropped by six percent.
The Stars Group -6% after share offering – https://t.co/250syp1onM
— Investing.com Stocks (@InvestingStockz) June 18, 2018
However, year to date the share price is still up well ahead of the index.
The news of the purchase of SBG gave the share price a major boost. The all-time high for Stars stock hit on June 21 this year when the price hit $38.90.
Stars Group CEO Rafi Ashkenazi explained the fit between the two companies:
“The acquisition of Sky Betting & Gaming is a landmark moment in The Stars Group’s history. SBG operates one of the world’s fastest growing sportsbooks and is one of the United Kingdom’s leading gaming providers. SBG’s premier sports betting product is the ideal complement to our industry-leading poker platform. The ability to offer two low-cost acquisition channels of this magnitude provides The Stars Group with great growth potential and will significantly increase our ability to create winning moments for our customers.”
When added together, Stars and Sky will be the largest online gaming company in the world.
The markets clearly love the SBG deal, going by the zoom in share price, even if they didn’t like the latest share offering. But will the deal also work out for poker players?
The increased size of the player pool should be the most significant change. PokerStars players already get access to the largest tournament guarantees offered by any online operator, but the addition of Sky’s mainly UK player base should see these increase.
The Sky player base is itself valuable, since its demographic characteristics will add a comparatively wealthy group with a large proportion of recreational players. Many of the recreational players will be primarily sports bettors, so we should see a moderation of the PokerStars player ecology even further away from hardcore grinders.
Sky players will find themselves in much bigger tournaments with huge field sizes, and should find that as part of the Stars player pool, they will have access to a much wider range of poker games to take part in — and at a wider variety of stakes.
Now that the funding processes are pretty much complete, the deal should go ahead without any hitches. There are no real regulatory issues involved, so completion can now go ahead.
Stars has been shy about promising a completion date, but sometime in late summer/early fall looks likely.