888 to sell its Latvian operations
Betting giant 888 has announced that it is selling the Latvian branch of its business for the lucrative amount of €28.3m (£24.6). According to 888, the company does not consider its Latvian betting sites to be in a core region, and the funds generated through the sale could be used for other investments. The buyer is Paf Consulting, a Finnish manufacturer and distributer of gaming consoles and machines for playing slots, bingo, the lottery, poker, and other games. The company has already entered the world of betting sites and online gaming with several brands, including their Latvian betting site Pafbet.lv. Latvia is considered one of the core markets for the company.
The deal between 888 and Paf Consulting will raise substantial funds for 888’s coffers, which the company has said it will use for general corporate purposes. Paf Consulting will initially pay €24.0m, reserving the other €4.3m as a security payable at the conclusion of the 2023 financial year and receipt of the company’s audited financials. The sale is also subject to a number of conditions agreed between the two parties.
Paf Consulting Chief Executive Christer Fahlstedt commented:
“We are thrilled to get the opportunity to continue to build on a great Latvian success story. With a long-term perspective, we are convinced that the Latvian market is moving in the direction of increased player protection and thereby a great strategic fit for Paf.”
As part of the sale, Paf Consulting will take over the operations and assets of 888’s Latvian versions of the William Hill and the Mr Green betting sites. The deal states that the current owner 888 will provide a “brand licence” for a limited period of time, meaning that Paf Consulting will be able to run the two sites with their present shaping for a little while, in Latvia only. After that, the websites will have to be rebranded.
While 888 currently owns 90% of its Latvian branch, the business has been set up to operate fully independently, with its own company structure, management, headquarters, budget etc. The platform used by the Latvian William Hill and Mr Green betting sites is fully separate from the platforms of other betting sites owned by 888. As such, the sale is not going to affect 888’s operations elsewhere, and a smooth and seamless transition of ownership is expected. One of the conditions of the sale is that the Latvian branch of 888 will be “carved out” from the group’s supplier contracts” and incorporated into Paf Consulting’s contracts. The deal is expected to be finalised in the next few weeks.
Speaking about the sale, 888’s Executive Chair Lord Mendelsohn said:
“We continually review our asset base to ensure that we are only holding assets that both contribute to our long-term strategy and will maximise value for our shareholders. As a business, our relatively limited exposure in the Baltic region means that the region is not one of our core or growth markets where we prioritise our investments. The Latvian business is a high-quality, locally regulated business, with an excellent team that has built a strong market position. I would like to express my sincere thanks to the team for their dedication during their time with the group and I am highly confident that under new ownership with Paf, the business will continue to flourish.”
It is unknown what 888 has in mind for replacing the Latvian branch. One speculation emerging in industry circles is that that 888 is expecting a fine or a regulatory settlement in relation to the handling of its Middle East VIP accounts, where some compliance issues were detected in relation to Know Your Customer checks, social responsibility, and anti-money-laundering regulations. The matter is still being investigated internally. Another guess industry experts have made is that 888 may be planning to acquire other betting sites in one of their core jurisdictions. A strong candidate may be Kindred Group’s betting sites Unibet, 32Red, bingo.com, and the other brands owned by the group. After a conclusion of a comprehensive review of the company’s marketing and commercial operations and several resignations of high-ranking executives, Kindred is reviewing different options for its futures, and has already approached 888 to gauge interest.
Whatever the future plans of 888, it is undoubted that both companies will benefit from the sale. Paf Consulting is already well established in Latvia and will be able to further develop and expand what has been started by 888. Meanwhile, 888 will generate significant funds that would help the company grow and develop in other betting and gaming jurisdictions.