Paddy Power Betfair has acquired an initial 51% stake in Georgian online sports and betting brand Adjarabet for €101m (£88.3m/$115.6m) in cash.
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The operator said the deal forms part of its European diversification plans, with the acquisition securing its place in the Georgian igaming market.
Adjarabet is recognised as one of the leading operators in Georgia, with a market share of around 40% based on customer deposit data in the country. It also has a presence in neighbouring Armenia through an exclusive marketing relationship with Adjaranet.
The operator offers a full range of online betting and gaming services in Georgia including casino titles, sports betting, poker and peer-to-peer games. In 2018, Adjarabet posted revenue of £64m and £20m in EBITDA.
Paddy Power Betfair has the option to purchase the remaining 49% stake in the operator after a period of three years, at a valuation equivalent to seven times Adjarabet’s EBITDA in 2021. This can be settled in cash or shares.
Peter Jackson, chief executive of Paddy Power Betfair, said: “This bolt-on acquisition is in line with our strategy of establishing podium positions in attractive online markets.
“Adjarabet’s leading brand presence and strong management team has established it as the clear no.1 in the fast-growing, regulated online Georgian market.
“Together with our group’s technology and sports capabilities, we are confident that Adjarabet will be strongly positioned to continue to build on this success.”
Paddy Power Betfair did not go into detail as to how the acquisition of the stake in Adjarabet would impact its own financial results.
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In Q3, Paddy Power Betfair posted revenue of £483m, up 8% on a proforma basis and 12% in constant currency. Online revenue from Europe during the period also increased by 15%.
Reflecting on the deal, Regulus analysts said while Paddy Power Betfair has cited an expected compound annual growth rate of 40% in Georgia, it warned that the country’s market is not risk free.
Regulus said such revenue characteristics “potentially raise questions around sustainability, safer gambling, KYC and AML”, citing both the geography and political history of the country.
Analysts also compared the acquisition to GVC Holdings’ purchase of a 51% stake in Mars LLC (Crystalbet) in March of last year in terms of geography and structure. But Regulus said Paddy Power Betfair will benefit from Adjarabet being the market leader, largely due to its brand links with Adjaranet.
Greentube, the interactive division of Novomatic, has entered into a new content partnership with Georgian online betting and casino operator Adjarabet.
Flutter Entertainment-owned Adjarabet will now offer customers in the country access to more than 100 slot titles from game developer Greentube.
Content available on the Adjarabet website includes popular titles such as Book of Ra Deluxe, Sizzling Hot Deluxe and Lucky Lady’s Charm.
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Novomatic has been active in Georgia for more than 10 years and, according to Greentube, this knowledge of the local market helped to secure the new deal.
“Greentube and Novomatic games have proven to be players’ favourites in Georgia, both land-based and online,” Greentube’s key account and sales manager Armen Tatarevic said.
“Going live with Adjarabet certainly marks a milestone for Greentube. Adjarabet is the Georgian market leader which makes us proud to welcome them on board.”
Tom Hutchinson, director of casino at Adjarabet, added: “Greentube is a very popular and well-known online casino games vendor in Georgia and its games, specifically the blue-chip titles from Novomatic have a very strong presence in land-based casinos here.
“For that reason, I’m positive Greentube will be one of the top suppliers we offer at Adjarabet.”
Flutter Entertainment, the operator formerly known as Paddy Power Betfair, took ownership of Adjarabet in February in an acquisition deal worth €101m (£89.9m/$113.8m).
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