GVC offloads Turkish-facing operations

GVC Holdings has agreed a deal to sell its Turkish-facing operations to Ropso Malta Limited for a performance related earn-out consideration of up to €150m ($174.9m).

The agreement, which relates to GVC’s Headlong Limited business and various other companies, is subject to gaming regulatory and lender approval, although the firm expects this to take place before the end of the year.

The consideration is receivable on a monthly basis over a five-year period, while GVC and Ropso Malta have agreed that following completion of the transaction, transitional services arrangements will take place for no longer than six months.

In a statement, GVC said: “The decision to sell Headlong and associated businesses has been taken against a backdrop where, in an increasingly maturing and regulating online gaming world, the board has concluded it is now appropriate for GVC to further increase its focus on regulated markets.”

GVC expects the regulated and/or locally taxed proportion group NGR to rise to approximately 75% after completion of the sale, with these proceeds to be used for general corporate purposes.

The company added that its board believes the sale will boost the attractiveness of the group to investors and potential consolidation partners.

“As the group evolves, our focus is increasingly on regulated markets and markets where we believe there is a realistic path to regulation.Today’s disposal is consistent with this strategy and enhances GVC’s position as a leading operator in a rapidly developing industry.” – said Kenneth Alexander, chief executive of GVC.

Analyst Simon French of Cenkos Securities added in a note: “Whilst clearly earnings dilutive this is a compelling strategic move resulting in a more regulated and attractive business, even better positioned to participate in sector M&A“.

It was reported by the FT earlier this month that GVC and Ladbrokes Coral were close to finalising a multibillion-pound merger.