Stars Group Continues Raising Funds for Sky Buy
Two months after the Stars Group announced it planned to acquire Sky Betting & Gaming, the company proposed a public offering of shares to help fund it. With a price tag of $4.7 billion, the company held out its tin cup in the form of a few million common shares.
And it worked. In fact, it worked so well that the Stars Group added another $250 million to its loan offering, increasing its capacity to a cool $1 billion.
The online poker community was fairly open-minded about the move that would put PokerStars and Sky Poker in the same family, with only a few die-hard Sky Poker fans concerned that they would lose their intimate and player-focused internet poker site to a conglomerate. The future of Sky Poker, however, is still undetermined at this point.
Just Two Months Ago…
When the news broke in April that the Stars Group was to buy Sky Betting & Gaming, the gaming world abuzz. The Stars Group hadn’t hidden the fact that it wanted to expand, but to go after Sky was quite a significant and strategic move to create the world’s largest publicly-traded online gaming company.
Canadian online poker giant Stars Group rises 11% on its $4.7 billion deal to buy UK-based Sky Betting & Gaming to expand in sports gambling. pic.twitter.com/FRNhHrUyPk
— Richard Dettman (@rwdettman) April 23, 2018
It wasn’t going to be cheap. The $4.7 billion cost was going to require a debt financing arrangement to come up with the $3.6 billion in cash, and the difference would be handled through the issuance of nearly 40 million common shares that equaled 20% of the Stars Group.
Everyone was on board. The Stars Group Board of Directors gave its unanimous approval, and all parties were fairly confident that various regulators and stock exchanges would also give their necessary approvals to move forward.
Shares Sell Quickly
In mid-June, the Stars Group filed a supplementary prospectus for a public offering of 15 million common shares. The net proceeds from it was to be combined with debt financing and the company’s own cash on hand to purchase Sky Betting & Gaming.
Days later, on June 21, the details were announced, as the price of the common shares was set at $38.00 each. The underwriters agreed to purchase 17 million shares from the Stars Group and 8 million from some of the company’s shareholders with expected net proceeds of $621,775,000. The offering would be open until June 26 per the Toronto Stock Exchange and Nasdaq.
The very next day, the Stars Group announced an offering of $750 million in unsecured senior notes due in 2026, the proceeds of which would also go toward the financing of the Sky deal.
On June 26, as promised, the Stars Group closed its public offering of common shares and reported net proceeds of $622 million before expenses and commissions. Meanwhile, the over-allotment period was to remain open until mid-July with options for the underwriters to purchase up to 1,875,000 additional common shares granted by the company and the same from the selling shareholders.
But Wait, There’s More
The following week, on June 28, the Stars Group made another announcement, this one regarding the upsizing and pricing of $1 billion aggregate principal amount of unsecured senior notes. That increased the original offering by $250 million.
💥 New #PRNewswire Article 🗞️
The Stars Group Announces Upsizing and Pricing of Private Offering of $1.0 Billion of Unsecured Senior Notes https://t.co/arVZQOsNFK
— POLITICAL HEDGE (@politicalHEDGE) June 29, 2018
The offering to private institutional investors was to remain open until July 10, however, at which point the transactions would conclude. As it stands, the financials should be complete by the end of the summer.
Focus on Sports Betting
PokerStars and the overall online poker segment of the Stars Group has been its primary source of revenue since the companies joined under one umbrella. But the acquisition of Sky Betting & Gaming will change that by putting sports betting – the strong suit of Sky – in the center of the Stars Group universe.
Included in rationale for The Stars Group's in acquiring Sky Bet on Saturday: Makes it "well-positioned to capitalize on potential US sports betting market."
— Dustin Gouker (@DustinGouker) April 23, 2018
It is not generally feared that online poker will suffer under the new arrangement, no matter how Sky Poker, PokerStars, and Full Tilt mesh in the end. It is most likely that Sky Poker will continue operating as usual but with the added bonus of a larger player pool as the sites will be connected on the same poker platform. Sky players will then have greater access to bigger tournaments, satellites, and other offers.