British private equity firm Bridgepoint is ready to acquire Cherry for SEK 9.19 billion. The purchase offer came a few weeks before the official reorganization of the Swedish gambling market.

A consortium led by London-based private investor Bridgepoint Advisers Limited has offered to acquire the Swedish gambling group Cherry AB for SEK 9.19 billion (about US $ 1 billion).

An independent committee was set up to review the application. Today, he recommended that shareholders accept the consortium’s offer of SEK 87 per share. The committee should have been created because the chairman of the company, Morten Klein, is part of a consortium that claims to be the Swedish gambling company.

Bridgepoint cherry gambling

The application is fully funded through a combination of equity provided by Bridgepoint and other consortium members and debt financing provided by Ares Management Limited. The application period is expected to begin on or so December 20, 2018 and expire on January 23, 2019.

Cherry AB is the second Swedish gambling company to have attracted international buyers in the past few months. Back in October, William Hill announced a cash offer to online gaming and betting operator Mr Green & Co. The British bookmaker said the acquisition of the operator will allow it to establish a presence in new markets, increase its online and international income, and reduce its impact on the UK gambling market.

The Independent License Application Committee said today that the forthcoming regulation of the gambling market in the Scandinavian country "has led to a discussion in the media and among investors about increased consolidation among market participants, including companies such as Cherry."

Following the reorganization of the market, the gambling industry will enter a "new phase of higher maturity", which will lead to a less predictable market outlook for the coming year. This, in turn, could lead to "more volatile earnings" for Cherry.

In addition, reputable Swedish companies have announced that they will withdraw from the gambling sector following a change in investment mandates and new sustainability directives. The Independent Tender Committee said it believed this would reduce the institutional capital of online gaming companies in Sweden. This would actually make it difficult for Cherry to fund its business effectively.

Founded in 1963, Cherry has established itself as one of the largest and oldest gambling companies in Sweden. It does business in five main areas: online gambling, casino game development, digital marketing, gaming technology and casinos.

The company will have to fight for a share of the Swedish gambling market from January 1, 2019, when the country’s new gambling law comes into force. The local gambling regulator Lotteriinspektionen has issued licenses to 33 interested gambling companies. More operators are expected to be eligible to operate in Sweden’s new regulated market in the coming weeks.

Categories: Gambling News