Major betting and gaming company 888 on Monday announced that it has reached an agreement to sell its Latvian business to Paf Consulting Abp.

The total consideration is up to €28.25 million (£24.6 million) for 100 per cent of the business on a cash-free debt-free basis, with an initial consideration of €24 million (£20.9 million) to be paid in cash upon completion of the transaction, and a further potential earn-out of up to €4.25 million (£3.7 million) payable in 2024 upon completion of the 2023 audited financials. The group owns 90 per cent of the entity and the consideration will be used for general corporate purposes.

The Latvian business operates with a local licence, using the William Hill and Mr Green brands. The group will provide a brand licence to continue the usage of these brands within Latvia for a limited period.

The business operates largely as an independent entity, with its own management team and operating on a separate technology platform. As such the sale is expected to have no impact on the ongoing operations and synergy program of the group and is consistent with the group strategy to focus on core and growth market plans, 888 said in a statement.

In 2022 the Latvia business generated net revenue of £9.1 million and EBITDA of £2.5 million, and the value of the gross assets subject to the transaction, as set out in the 31 December 2022 balance sheet, was approximately £9.3 million.

Completion of the sale is conditional upon, among other items, the carve out of the Latvian subsidiary from the group’s supplier contracts and incorporation of the Latvian subsidiary into Paf’s contracts, certain change of control consents and the payment of a dividend by the Latvian subsidiary. Completion is currently expected to occur in the coming weeks.

Lord Mendelsohn, Executive Chair of 888, commented:

“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.”

Janis Tregers, co-founder and head of Latvia board, commented:

“We launched in 2012 as 11.lv, and in 10 years, have built a market-leading position in Latvia, with over 10 per cent market share. In 2018, we sold 75 per cent of the business to Mr Green at an enterprise value of €3.7 million, and this transaction to sell the entire business for a valuation of up to €28 million reflects the hard work of our team across the business resulting in significant value creation. Under the new ownership with Paf, I am confident that the business will continue to go from strength to strength, delivering great products and experiences for our customers.”

Christer Fahlstedt, CEO of Paf, 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.”

Tekkorp Capital acted as financial adviser to 888.

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