Sportech pays £51.4m for US sports betting business

POOLS operator Sportech is buying racing and venue management business SGR from US group Scientific Games Corp for up to $83m (£51.3m) in cash and shares to become a world leader in pools betting.

Sportech said yesterday it would pay an initial $65m, followed by $10m on 30 September 2013 and up to $8m if SGR meets its targets over the next three years.

Pools betting is a gambling system in which all bets of a particular type are placed in a pool and payout odds are calculated by sharing the pool among all winning bets.

This differs from fixed-odds betting, where the payout is agreed at the time the bet is sold.

“This is a transformational transaction for Sportech. It catapults the business onto the international stage,” chairman Piers Pottinger , the veteran financial public relations adviser, said.

Sportech said the initial sum would comprise $32.9m in cash and 39.74m Sportech shares issued at 50p apiece, which will give Scientific Games a 19.99 per cent stake in the enlarged group.

Sportech said it also planned to raise £29.2m ($47m) in a fully-underwritten placing and open offer of 58.4m shares, also priced at 50p each.

Gaming software firm Playtech said it would buy 19.88m of the shares, giving it a 9.99 per cent stake in the enlarged group, adding it had signed a letter of intent to provide products and services to the SGR business. Two SGR directors join the Sportech board.

SPORTECH group was advised by Close Brothers Corporate Finance (CBCF) on both the acquisition of SGR and the share-raising.

Henry Wells is the lead man on the transaction.

Wells, who has been at CBCF for 10 years, heads the firm’s leisure and retail team and reports to the head of corporate finance, Richard Madden. CBCF, which is part of Daiwa Capital Markets, has been advising Sportech on a number of opportunities over the last year.

Wells qualified and practiced as a solicitor in the corporate group at the Eversheds' London office. He is a history graduate from Newcastle University. He has advised Austin Reed and Hamleys among others and when not working on deals is an avid cricket fan.

Investec is also working on the deal as the joint sponsor and broker, with Patrick Robb and Martin Smith heading up the team. Public relations adviser to the firm is Pelham Bell Pottinger. The transaction gives the business a new shareholder base (with SGR and Playtech taking stakes in the new business) that will lead to interesting new international opportunities

The deal takes Sportech’s UK-based pools betting expertise from football into horse racing and on a global basis. The two new directors of the business, Brooke Pierce and A Lorne Weil from SGR are both experienced practitioners, especially Weil who has invested roughly £1.0m in the deal.

David Hellier