ZEAL rejects Lottoland offer

News on 12 Jan 2019

ZEAL Network SE has rejected Lottoland’s offer to acquire its core German business assets.

Branding the deal “significantly inadequate”, Zeal said the offer price range of Euro 60 million to Euro 76 million neglects the value of ZEAL’s German business and the sale of which would strip ZEAL of its most valuable asset and the basis for future brokerage growth in Germany.

Dr Helmut Becker, CEO, ZEAL: “The indicative offer from Lottoland is an attempt to buy our core German assets on the cheap.”

“The German business of Tipp24 contributes by far the largest part of ZEAL’s revenues and earnings and at the same time, its client base and brand represent the key part of the growth platform for the future German lottery brokerage business, following the planned transformation of ZEAL’s current German secondary lottery business into a locally licensed online brokerage model and the agreed combination with Lotto24.”

The Executive Board urged shareholders to consider independent analysts’ share price targets for ZEAL, saying the offer does not provide a reasonable basis for engagement with Lottoland.

In light of the rejection of the offer, ZEAL said it would go ahead wit the general meeting on January 18, 2019.

Dr Helmut Becker, CEO, ZEAL, commented: “Our plan to convert Tipp24 into a brokerage business and to combine it with Lotto24 will create a strong platform for future growth and is far superior to the Lottoland proposal.

“The positive preliminary results announced today by Lotto24 further emphasise the attractiveness of the brokerage business model.

“Lottoland’s offer therefore confirms our view that their main intention is to disrupt the Lotto24 transaction, driven by their business interests as a competitor.”

In related news, Lotto24 AG reported encouraging FY2018 preliminary results Thursday.

Billings are expected to reach Euro 321.8 million (2017: Euro 220.7 million), up 45.8 percent and revenue growth is estimated to show growth of 51.8 percent to reach Euro 38.3 million (2017: Euro 25.2 million).

The company expects to deliver gross margin of 11.9 percent (2017: 11.4 percent), and reports 596,000 new customers (2017: 291,000), in total amounting to 2,169,000 (2017: 1,573,000).

Lotto24 expects EBIT to improve to Euro 2.6 million (2017: Euro 1.0 million) and net profit of Euro 7.7 million (2017: Euro 2.5 million) largely as a result of a positive technical tax effect of Euro 5.2 million (2017: Euro 1.8 million) in connection with the formation of deferred taxes.

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