Lottoland: Zeal "did not secure mandate" for Lotto24 deal

18 January 2019

Lottoland has said it is disappointed by Zeal Network shareholders' decision to approve the necessary preconditions for the lottery brokerage's acquisition of its former subsidiary Lotto24.

The lottery betting operator said the fact that just 51.43% backed a motion to waive a requirement for Günther Group to make a full takeover offer for the combined Lotto24 and Zeal business suggested the company had failed to secure a mandate to proceed with the deal. 

Investment vehicle Günther Group would hold 30% of the combined entity's share capital, which would require it to make an offer to acquire the remaining 70% of shares without this waiver.

Lottoland chief executive Nigel Birrell (pictured) noted that had Lotto24 shareholders not had a vote, this resolution would not have passed.

“This highlights what we have expressed all along - the Lotto24 shareholders are the only ones that will benefit from this transaction; and that the transaction is value destroying for Zeal shareholders,” he said.

However, Birrell hinted that Lottoland – which holds a 5.5% stake in Zeal – could now move on from its dispute of the deal, saying the company will continue to look at other M&A opportunities and to consolidate its position in the market.

The lottery betting company has been openly critical of the proposed transaction in recent weeks and had urged Zeal to delay a planned Extraordinary General Meeting in order to allow shareholders to gather more information on the deal. However, the meeting went ahead today (January 18) as planned and 60.75% of Zeal shareholders voted in favour of the required capital increase to facilitate the all-share deal.

Zeal first announced plans to retake control of its subsidiary, which it span off in 2012, towards the end of last year. At the time, Zeal said the deal would create a lottery brokerage giant with billings of around €500m (£440.7m/$570.1m).

Lottoland attempted to have the today's meeting delayed - something Zeal said would force it to withdraw its offer - then put forward a €76m bid for Zeal’s Tipp24 business.

Zeal promptly rejected the offer, saying it significantly undervalued its German business and would strip the company of its most valuable asset.

Securing shareholder approval will now allow Zeal to commence the acceptance period for the takeover. Subject to clearance from the German Federal Financial Supervisory Authority, this is expected to begin before the end of the month.