Unibet mulls long-term value of Stan James brand
While chief exec Henrik Tjärnström remains confident of building scale in the UK following its £19m deal, long-term questions remain over what Unibet does next with its new asset
Unibet’s £19m acquisition of Stan James may have put to bed speculation over the future of the Gibraltar-based firm, but ultimately it raises more questions than it does answers.
While Unibet’s purchase of Stan James is further signs of a growing wave of consolidation, it’s a deal unlikely to cause more than a slight tremor to the foundations of the UK sports betting market.
In the first five months of 2015 Stan James Online recorded revenues of £11m which on an annualised basis would add up to between £22m and £23m, while on a UK-wide basis Stan James is estimated to account for about 1% or 2% of the overall market.
“I think it probably makes sense for them but that business has been up for sale for some time,” one industry expert told eGR. “Everybody has had a look at it and I would slightly wonder when so many people have had a look at it, there must be some good reasons why no one else has acquired it.”
However, despite not yet obtaining the scale to make an immediate push for a top five position in the UK online sports betting market, gaming consultant Eduardo Morales-Hermo believes the deal could mark a major stepping stone for Unibet to build a much larger presence.
“Gaining economy of scale is necessary to better compete in the UK market since the PoC Tax was implemented and even though it will remain behind the big online operators in the market, the resulting entity in the UK has room for growth with the economic muscle and marketing skills of Unibet,” he says.
Target market
The big question now is what Unibet is going to do next with its new UK-facing asset. The Stockholm-listed operator must firstly decide whether to keep the Stan James brand which, although has certainly diminished among UK sports betting punters in recent years, is still much stronger than Unibet’s which is still coming from relatively low levels.
The business fits in seamlessly with Unibet’s long-running strategy of smaller bolt-on deals and a push into regulated markets, and would suggest the eventual demise of the Stan James brand online.
Since 2012 Unibet has completed three acquisitions, including a 13.5m deal for rival Scandinavian operator Bet24 in 2012 and entry into the French and Australian online gambling markets with the acquisitions of Solfive SAS and Betchoice, with all three now branded as Unibet in their respective markets.
Speaking exclusively to eGaming Review last week, Tjärnström wouldn’t commit to the future of the brand, but said he was “optimistic with the opportunities ahead” as a result of its deal for the UK-facing, hailing what he believes are attractive revenue synergies between the two companies.
“It’s a business we’ve always admired, as one of the first movers into the online space in the UK market, and they’ve always had the same brand values as us in terms of customer centricity,” he said.
“It’s an expert brand in the local UK market and as such offers high quality within specific sports which we will look to add to through our cross-selling expertise, product, mobile and volume such as streaming rights.”
Big decisions to be made
And while the two firms will initially run on their own individual operating platforms, switching Stan James over to its Kambi-powered platform could potentially create significant cost-savings by ending the Gibraltar-based risk management functions.
The new scenario will likely result in the unification of two online platforms and see one team running the resulting group, leaving Stan James’ 150 employees based on the Rock anxiously biting their nails.
But if Unibet is not going to keep the technology or the brand, £19m is probably an expensive price despite the relatively low 6x EBITDA multiple. “I assume they’re going to keep at least one of them as it’s a lot of money to pay for a database,” Gavin Kelleher, an analyst at Goodbody, claims.
The deal certainly marks Unibet’s biggest push into the UK market to-date but whether its new asset is strong enough to help propel it into its targeted 5 market position within the next few years remains to be seen.