Information on the Target

Gamenet Group S.p.A. (MTA; Bloomberg ticker: GAME: IM) is a publicly traded company listed on the STAR segment of the Mercato Telematico Azionario, regulated by Borsa Italiana S.p.A. The group comprises Gamenet S.p.A., its wholly-owned subsidiary, which has entered into a binding agreement to acquire 100% of GoldBet S.r.l., a prominent gaming and betting company authorized to operate in Italy. This acquisition represents a strategic move for Gamenet Group to expand its footprint in the Italian gaming market.

GoldBet operates an extensive physical network of 990 betting shops and is granted the concession for online gaming and betting, including mobile platforms. Financial reports for GoldBet indicate a strong performance, closing the year 2017 with an EBITDA of €40 million, an EBIT of €34 million, and a net income of €23 million. For the twelve-month period ending June 30, 2018, GoldBet estimates its EBITDA at approximately €50 million, demonstrating the company’s solid market position.

Industry Overview in Italy

The gaming and betting industry in Italy is one of the most regulated and lucrative sectors across Europe. Over recent years, the country has witnessed substantial growth in both traditional and online betting platforms, driven by a rising acceptance of gaming activities among the population and the increasing popularity of sports betting. Italy has a robust legal framework governing the industry, which provides clarity and security for operators and investors alike.

In particular, sports betting has gained traction, with an emphasis on enhancing the customer experience through advanced mobile platforms and digital engagement. The opening of online markets has enabled companies to diversify their offerings, including virtual betting and online casinos, leading to increased competition among major players.

With the regulatory environment continually evolving, the focus on responsible gaming practices is paramount, ensuring that operators adhere to compliance standards while fostering a sustainable business model. Major industry players have invested significantly in technology to improve operational efficiency and customer engagement, positioning themselves proactively in this competitive landscape.

As of mid-2018, the combined market share estimates for sports betting indicate that the top operators control approximately 18% of the market. This demonstrates the potential for further consolidation and growth opportunities for companies like Gamenet Group and GoldBet, allowing them to capture a larger clientele and increase profitability.

The Rationale Behind the Deal

The acquisition of GoldBet is part of Gamenet Group's broader strategy to strengthen its position within Italy's multi-concession gaming sector, particularly in sports betting. By integrating GoldBet’s operations, Gamenet expects to enhance its portfolio diversification while maximizing profitability across EBITDA, EBIT, and net income metrics. The combined entity will emerge as the leading betting operator in Italy, capturing an estimated 21% share of the sports betting market in physical networks and significant shares in both online and virtual betting.

Moreover, Gamenet anticipates realizing cost synergies from the integration process, with projected annual savings ranging from €12 to €15 million within 18 to 24 months post-closing. This strategic move not only positions Gamenet for immediate growth but also equips the group with the necessary capabilities to leverage future opportunities in the burgeoning Italian gaming market.

Information About the Investor

Gamenet Group is a recognized leader in the Italian gaming market, renowned for its comprehensive portfolio of gaming products operated under a multi-license regime. As of March 31, 2018, the group reported total revenues of €148.9 million, showcasing its ability to operate across various segments, including amusement with prize machines, video lottery terminals, and online betting.

With an extensive network of licenses granted, Gamenet possesses 39,118 AWPs, 8,570 VLT licenses, and manages 742 betting licenses across Italy, positioning itself strategically to consolidate its operations with GoldBet. The leadership team's commitment to driving growth and innovation in the gaming sector further underpins the group's strong market positioning and confidence in this acquisition.

View of Dealert

This acquisition of GoldBet by Gamenet Group appears to be a highly strategic investment, with the potential for significant operational synergies and an expanded market presence in Italy. By becoming the leading sports betting operator, Gamenet enhances its competitiveness in a rapidly evolving industry. The projected cost synergies and increased market share are compelling indicators of the positive impact this deal could have on Gamenet’s financial performance.

However, while the foundational dynamics are promising, challenges may arise during the integration process. Successfully aligning operations and systems between Gamenet and GoldBet will require careful management to ensure that projected synergies materialize within the anticipated timeframe. The dependence on regulatory approvals also adds a layer of uncertainty that stakeholders should consider.

Overall, if Gamenet Group can navigate these obstacles effectively, this acquisition could solidify its position as a dominant force in the Italian gaming market, driving long-term revenue growth and profitability. It reflects an important step towards further consolidation in a sector that continues to exhibit exponential growth opportunities.

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