German online lottery leader ZEAL Network has set out to acquire prize draw operator SevenCanyon in a deal that will allow the former company to enter the highly attractive UK prize draw market. The acquisition aligns with ZEAL’s philosophy of geographical expansion and product diversification.
ZEAL to Acquire the Remainder of SevenCanyon’s Shares
In its announcement, ZEAL said that it has signed a share purchase agreement to acquire the remaining 96.5% of the shares in SevenCanyon Limited. For reference, ZEAL already has a 3.5% stake in the latter company.
The acquisition will allow ZEAL to enter the UK market, which is one of the largest markets for digital prize draw offerings in Europe. SevenCanyon operates several well-known UK prize draw platforms, including the following:
- 7days Performance
- Redline Competitions
- UK Carp Competitions
The prize draws sector is all about lottery-style games with non-cash prizes on the line. Players of SevenCanyon’s games can win various things, such as houses, cars, and lifestyle products.
SevenCanyon Is Expected to Be a Major Contributor to ZEAL’s Business
In terms of finance, SevenCanyon generated EBITDA of over GBP 10 million ($13.4 million). As a result, ZEAL expects it to be a major contributor to its broader business. ZEAL said that it will make adjustments to its revenue guidance after the finalization of the IFRS presentation of SevenCanyon’s revenue streams.
Still, ZEAL put its EBITDA target at EUR 70-75 million ($94-101 million) for the year.
The acquisition of the remaining 96.5% of SevenCanyon’s shares will see ZEAL pay roughly GBP 33.8 million ($45.4 million), plus an earn-out payment of up to GBP 4.8 million ($6.4 million) over a period of six months. To that end, ZEAL will take an EUR 40 million term loan with a duration of seven years. The loan was arranged by Deutsche Bank.
ZEAL Leaders Were Pleased with the Arrangement
Company leaders commented on the matter, with ZEAL Network’s CEO, Dr. Stefan Tweraser, calling SevenCanyon “one of the most successful prize draw operators in the UK.” As a result, he was very pleased about the current deal.
With the acquisition, we hit the ground running in a highly attractive and growing market. We also accelerate the implementation of our strategy to selectively diversify our business model through new products and new markets.
Dr. Stefan Tweraser, CEO, ZEAL Network
ZEAL Network’s CFO, Andrea Behrendt, was similarly pleased with the deal and lauded SevenCanyon’s highly profitable business model. Behrendt also said that the new loan agreement will allow ZEAL to retain financial flexibility to pursue other growth opportunities.